ØKB2104 Investments and Finance

Contents and structure

The course covers the prerequisites and foundations for investments and finance, calculating cash flows relevant for decision making, correct methods of value assesment, interest calculations and financial mathematics, investment analysis, economic life time and replacement analyses, the effect of taxes and inflation on cash flows, risk assesment, portfolio theory and the capital value model, and sources of financing.

Learning Outcome

Knowledge:

The Student:

• Can explain the basis for the time value of money.
• Can explain the relationship between the use of net current value as a decision making criterion for investments and the owners\' economic interests in the company.
• Can account for the relationship between net current value and the internal rate of return.
• Can describe other methods than current value and internal rate of return for evaluating investment and financial projects.
• Can account for the capital value model.
• Can explain the value of flexibility in investment projects.

Skills:

The Student:

• Can budget cash flows that are relevant for decision-making concerning investment and financial decisions.
• Can carry out profitability analyses based on net current value, taking into account possible taxes, inflation, financing of debt, and risks with associated demands for returns.
• Can calculate an internal rate of return.
• Can calculate an effective interest rate and can apply this in various financial decisions.
• Can analyze the risk in investment projects when the total risk is relevant.
• Can produce risk-adjusted demands for returns in order to estimate the alternative costs of capital.
• Can apply the capital value model to establish a risk-adjusted demand for returns when the market risk is relevant.

General Competence:

The Student:

• Can ask critical questions about and reflect upon central prerequisites and assumptions within this academic field.

Entry requirements

None

Recommended previous knowledge

ØKB1110 Introduction to Business Economics and Accounting or similar

Teaching methods

Lectures, exercises

Compulsory learning activities

Yes, specified in the course plan in the semester start

Assessment

Written exam 4 hrs 100%   Possible digital exam

Grades A - F

Examination support material

Basic calculator  

More about examination support material