Introduction to Investment and Finance

by Lars Wøldike Petersen
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210 pages
Language:
 English
The book introduces the reader to the basic mindset behind investment and finance evaluations as well as the most common used methods and techniques used for evaluation of these opportunities.
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Description
Content

  1. Investment 
    1. Introduction to investment 
    2. Conclusion 
  2. Investment assumptions 
    1. Introduction 
    2. Time of investment and start of business 
    3. Cash earnings 
    4. Cash investments 
    5. Taxes 
    6. Interest amounts 
    7. Relevant amounts 
    8. None committed amounts 
    9. Opportunity amounts 
    10. Marginal amounts 
    11. Discount rate 
    12. Investment horizon 
  3. Investment evaluation methods 
    1. The Net Present Value Method 
    2. Internal Rate of Return Method 
    3. The Annuity Method 
    4. The Pay-Back Method 
  4. Investment motives 
    1. Investment in additional capacity 
    2. Investment in a new project 
    3. Rationalization investments 
  5. Critical values in investments 
  6. Choosing between investment evaluation methods 
  7. Investments and taxation 
    1. Introduction 
    2. General assumptions on taxes 
  8. Investment and inflation 
    1. Introduction 
    2. Investment including inflation – one inflation rate 
    3. Investment including inflation – multiple inflation rates 
  9. Investment and working capital 
    1. Introduction 
    2. Including working capital in investment evaluations 
  10. Replacement of investments 
    1. Introduction 
    2. The no-replacement situation 
    3. The identical replacement situation 
    4. Replacement of old technology with new technology 
  11. What to include in real life? 
  12. Financing 
    1. Introduction 
    2. Equity financing 
    3. Debt financing 
  13. Financing considerations 
    1. Introduction 
    2. Business environment 
    3. Loan terms 
  14. Amortization of loans 
    1. Introduction 
    2. Standing loan (bullet loan) 
    3. Serial loan 
    4. Annuity loan 
  15. Evaluation of loans 
    1. Introduction 
    2. Evaluation of a standing loan (bullet loan) 
    3. Evaluation of a serial loan 
    4. Evaluation of an annuity loan 
    5. Evaluation loans – overview 
  16. Evaluation of other credit 
    1. Introduction 
    2. Overdraft accounts (non-scheduled amortization) 
    3. Trade creditors 
  17. Financial planning 
    1. Introduction 
    2. Finding the right financing package 
    3. Evaluation of cost of the financial package 

The book will introduce the reader to the following topics:

  • The necessity for evaluation of investment and finance opportunities
  • Most common motives behind investment 
  • Basic assumptions behind investment and finance evaluations
  • Most common methods and techniques used for evaluation of investment and finance opportunities
  • Pitfalls in methods and techniques for evaluation of investment and finance opportunities
  • Planning of investment financing considering flexibility, cost and timing of liquidity
The book contains numerous exercises, which the reader can solve to train the understanding of the topics presented above.