Corporate Investment Decisions and Economic Analysis Exercises and Case Studies

Authors : BABUSIAUX Denis   PIERRU Axel   ISBN :  2-7108-0859-5  Price : 45 Euros, 54 $US, 295.19 FF Publication Date :  Jul 2005 trade paperback, 170 x 240 mm, 226 p., 14 figs., 78 tables.  Press reviews

Economic analysis of industrial projects is based on methods which are often simple, sometimes complex, yet always to be applied with rigor. The aim of this book is to help readers assimilate the concepts and methods for investment decision and project evaluation. It offers a wide range of exercises, problems and case studies taken from business, which are the fruit of many years of teaching, consulting and research. Some are direct application of basics, others require a higher degree of reflection for more complex applications. Our approach borrows elements from microeconomics, engineering economics and finance theory. While many examples relate to the energy sector, particularly oil and gas, the problems addressed are of broader scope and so are fully applicable to other industry sectors. This book is ideally suited to both professionals and students who seek to master capital budgeting techniques. A review of essential points is proposed at the beginning of each chapter and key methodological elements are recalled in the solutions.

  Contents: 1. Cash Flow Analysis. 2. Book Rate of Return and Payback Period. 3. Basics of Discounting. 4. Evaluating Projects and Comparing Alternatives. 5. Marginal cost, Equivalent Cost and Replacement Analysis. 6. After-Tax Analysis. 7. Calculations in Nominal and Real Terms – Effects of Inflation on Profitability. 8. Impact of Technological Progress Upon Equivalent Cost and Replacement Analysis. 9. Discount Rate, Cost of Capital and Capital Rationing. 10. Financing Mix and Project Evaluation: Alternative Methods and Special Cases. 11. Interdependent Projects and the Use of Optimization Methods. 12. Investment Under Uncertainty: Decision Theory and Real Option Analysis.

[This book is available in French under the title "Décision d'investissement et création de valeur"]

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