Real Options in Investment Decisions

DATE:
1ST BATCH:         28th – 31st Jan,2025
2ND BATCH:       3rd – 6th June,2025
3RD BATCH:        14th – 17th Oct,2025

Investment Appraisal and Risk Analysis
Course Objectives
• Understand the fundamental concepts of investment appraisal and risk analysis
• Develop skills in evaluating investment opportunities using various techniques
• Learn how to identify, assess, and manage risks associated with investments
• Gain knowledge of the factors influencing investment decisions
• Enhance decision-making abilities in the context of investment management
Course Content
Introduction to Investment Appraisal
• Definition and importance of investment appraisal
• Types of investments (short-term, long-term, fixed, working capital)
• Investment decision-making process
Financial Techniques for Investment Appraisal
• Net Present Value (NPV)
• Concept and calculation of NPV
• Interpretation and decision rules
• Internal Rate of Return (IRR)
• Concept and calculation of IRR
• Comparison with NPV
• Payback Period
• Concept and calculation of payback period
• Advantages and limitations
• Accounting Rate of Return (ARR)
• Concept and calculation of ARR
• Interpretation and decision rules
Risk and Uncertainty in Investment Decisions
• Risk and uncertainty: definitions and differences
• Types of risks in investments
• Business risk
• Financial risk
• Market risk
• Political risk
• Measuring and assessing risk
• Sensitivity analysis
• Scenario analysis
• Monte Carlo simulation
Incorporating Risk into Investment Appraisal
• Adjusting discount rates for risk
• Weighted Average Cost of Capital (WACC)
• Risk-adjusted discount rates
• Certainty Equivalent Approach
• Concept and calculation of certainty equivalents
• Incorporating risk into NPV and IRR

• Concept of real options
• Types of real options
• Option to expand
• Option to abandon
• Option to defer
• Option to switch
• Valuing real options
• Binomial option pricing model
• Black-Scholes option pricing model

Methodology
The training methodology integrates lectures, interactive discussions, collaborative group exercises, and illustrative examples. Participants will acquire a blend of theoretical insights and hands-on practical experience, emphasizing the application of learned techniques. This approach ensures that attendees return to their professional environments equipped with both the competence and self-assurance to effectively implement the acquired skills in their responsibilities.
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DATE:
1ST BATCH:         28th – 31st Jan,2025
2ND BATCH:       3rd – 6th June,2025
3RD BATCH:        14th – 17th Oct,2025