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Project Valuation and the Capital Budgeting Process

Michael J. Readey, Ph.D.

4.8

Based on 218 ratings

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Michael J. Readey, Ph.D.

This course describes the economic viability of an engineering project through the application of net present value, internal rate of return, and payback period analysis. The impacts of depreciation, taxes, inflation, and foreign exchange are addressed. The capital budgeting process is discussed, showing how companies make decisions to optimize their investment portfolio. Risk is mitigated through the application of quantitative techniques such as scenario analysis, sensitivity analysis, and real options analysis.

This course can be taken for academic credit as part of CU Boulder’s Master of Engineering in Engineering Management (ME-EM) degree offered on the Coursera platform. The ME-EM is designed to help engineers, scientists, and technical professionals move into leadership and management roles in the engineering and technical sectors. With performance-based admissions and no application process, the ME-EM is ideal for individuals with a broad range of undergraduate education and/or professional experience. Learn more about the ME-EM program at https://www.coursera.org/degrees/me-engineering-management-boulder.

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What's inside

Syllabus

Complex Cash Flow Analysis

Considers more complex cash flow scenarios involving multiple cash flows, perpetuities, and the impact of multiple compounding interest periods per year. Many practical problems are worked both analytically and with spreadsheets.

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Taught by Michael J. Readey, Ph.D., who has expertise in engineering project evaluation and optimization

Develops skills in project valuation and selection, which are essential for engineering managers and technical professionals

Provides hands-on practice in applying quantitative techniques like scenario analysis and sensitivity analysis to mitigate risk

Covers advanced concepts such as depreciation, taxes, inflation, and foreign exchange impacts on project cash flows

Requires students to have a strong foundation in engineering and financial analysis

Assumes familiarity with engineering software and data analysis tools

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Reviews summary

Project valuation and capital budgeting essentials

According to students, this course provides a strong foundation in project valuation and capital budgeting, essential for engineering and technical professionals. Learners frequently highlight the practical application of concepts like Net Present Value (NPV) and Internal Rate of Return (IRR), often enhanced by the use of spreadsheet analyses for real-world scenarios. The content is generally considered well-structured and clear, making complex financial topics accessible. Some learners might find the pace requires dedicated effort, especially without a background in finance, but its relevance to career development is consistently praised.

Hands-on learning through practical spreadsheet exercises.

"The spreadsheet examples were incredibly helpful for understanding the calculations and applying the formulas."

"I gained proficiency in using Excel for complex cash flow analysis, which is a valuable skill."

"Being able to work problems both analytically and with spreadsheets was a major plus for my learning style."

Complex financial concepts are explained with clarity.

"The instructor did a fantastic job simplifying complex financial models and making them understandable."

"I appreciated how clearly depreciation, taxes, and inflation were broken down into manageable parts."

"The lectures made topics like real options analysis much easier to grasp than I anticipated."

Focuses on real-world application of valuation techniques.

"I found the concepts directly applicable to my work in project management, providing immediate utility."

"The course content provided me with practical tools and strategies for financial justification in my role."

"It really helped me understand how to apply NPV, IRR, and payback period in business decisions, not just theory."

Highly relevant for professionals in engineering management.

"This course is invaluable for anyone in a leadership role in engineering or technical project management."

"It directly contributes to the skills needed for making sound capital budgeting decisions in a corporate setting."

"I feel much better equipped to make informed investment decisions and contribute to strategic planning after this program."

Pace might challenge those new to finance.

"As someone relatively new to finance, I found the initial modules quite fast-paced and required extra study."

"I felt this course required a solid grasp of basic algebra to fully keep up with the calculations and examples."

"I needed to review some prerequisite concepts before starting the course effectively to truly benefit."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Project Valuation and the Capital Budgeting Process with these activities:

Capital Budgeting: Planning and Analysis for the Future

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This book provides a comprehensive overview of capital budgeting techniques, which will supplement the materials in this course.

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Read each chapter
Complete the end of chapter questions
Write a summary of each chapter

Capital Budgeting Workshop

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Supplement your learning by attending workshops that offer hands-on practice and meet others in the field.

Browse courses on Capital Budgeting

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Find a workshop
Register for the workshop
Attend the workshop

NPV, IRR, and Payback Period Calculations

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Practicing financial engineering calculations will help improve your proficiency in them.

Browse courses on Net Present Value

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Find an online calculator
Plug in different values
Check your answers

Five other activities

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Study Group

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Collaborating with your peers in a dedicated study group will help you solidify your understanding of course material.

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Form a study group
Meet regularly
Discuss course material

Financial analysis project

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Start working on a project that will increase your understanding of the financial engineering skills you will learn in this course.

Browse courses on Financial Analysis

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Choose a project
Gather data
Analyze data
Write report

Mentor a Student

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Leading others as a mentor can help you deepen your understanding of the course material and strengthen your leadership skills.

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Sign up to be a mentor
Meet with your mentee
Provide guidance and support

Financial Engineering Blog

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Creating a blog that discusses topics of interest and relevance to this course will provide you with added knowledge beyond this course.

Browse courses on Financial Engineering

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Choose a topic
Research the topic
Write a blog post

Financial Model

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Developing a financial model that applies the concepts you will learn in this course will help you gain practical experience using these techniques.

Browse courses on Financial Modeling

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Choose a project
Gather data
Build the model

Career center

Learners who complete Project Valuation and the Capital Budgeting Process will develop knowledge and skills that may be useful to these careers:

Financial Analyst

Financial Analysts use their knowledge of finance and economics to evaluate companies and investments. They often work in the finance industry, but may also be employed by corporations, non-profits, or government agencies. This course can help Financial Analysts by providing a strong foundation in project valuation and the capital budgeting process. This knowledge can be used to make better investment decisions and to improve the financial performance of organizations.

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Investment Banker

Investment Bankers provide financial advice to companies and governments. They help clients raise capital, merge with other companies, and make other financial decisions. This course can help Investment Bankers by providing a strong foundation in project valuation and the capital budgeting process. This knowledge can be used to provide better advice to clients and to help them make better financial decisions.

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Portfolio Manager

Portfolio Managers manage investment portfolios for individuals and institutions. They make decisions about which investments to buy and sell, and how to allocate assets. This course can help Portfolio Managers by providing a strong foundation in project valuation and the capital budgeting process. This knowledge can be used to make better investment decisions and to improve the performance of investment portfolios.

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Risk Manager

Risk Managers identify and manage risks for organizations. They work in a variety of industries, including finance, insurance, and healthcare. This course can help Risk Managers by providing a strong foundation in project valuation and the capital budgeting process. This knowledge can be used to identify and manage risks more effectively and to improve the overall performance of organizations.

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Consultant

Consultants provide advice to companies and organizations on a variety of topics, including finance, marketing, and operations. This course can help Consultants by providing a strong foundation in project valuation and the capital budgeting process. This knowledge can be used to provide better advice to clients and to help them make better decisions.

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Project Manager

Project Managers plan, execute, and close projects. They work in a variety of industries, including construction, engineering, and software development. This course can help Project Managers by providing a strong foundation in project valuation and the capital budgeting process. This knowledge can be used to make better decisions about project scope, budget, and schedule.

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Budget Analyst

Budget Analysts prepare and manage budgets for organizations. They work in a variety of industries, including government, healthcare, and education. This course can help Budget Analysts by providing a strong foundation in project valuation and the capital budgeting process. This knowledge can be used to develop more accurate and effective budgets.

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Financial Planner

Financial Planners help individuals and families plan for their financial future. They provide advice on a variety of topics, including retirement, education, and investment. This course can help Financial Planners by providing a strong foundation in project valuation and the capital budgeting process. This knowledge can be used to provide better advice to clients and to help them make better financial decisions.

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Accountant

Accountants prepare and file financial statements for businesses. They also provide advice on tax and accounting matters. This course may be useful for Accountants who want to develop a stronger understanding of project valuation and the capital budgeting process. This knowledge can be used to provide better advice to clients and to help them make better financial decisions.

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Auditor

Auditors examine financial records to ensure that they are accurate and complete. They work in a variety of industries, including accounting, finance, and government. This course may be useful for Auditors who want to develop a stronger understanding of project valuation and the capital budgeting process. This knowledge can be used to conduct more effective audits and to provide better advice to clients.

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Economist

Economists study the production, distribution, and consumption of goods and services. They work in a variety of industries, including government, academia, and business. This course may be useful for Economists who want to develop a stronger understanding of project valuation and the capital budgeting process. This knowledge can be used to conduct more accurate economic analyses and to provide better advice to policymakers.

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Statistician

Statisticians collect, analyze, and interpret data. They work in a variety of industries, including healthcare, finance, and marketing. This course may be useful for Statisticians who want to develop a stronger understanding of project valuation and the capital budgeting process. This knowledge can be used to conduct more accurate statistical analyses and to provide better advice to clients.

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Data Scientist

Data Scientists use data to solve business problems. They work in a variety of industries, including technology, finance, and healthcare. This course may be useful for Data Scientists who want to develop a stronger understanding of project valuation and the capital budgeting process. This knowledge can be used to develop more accurate data-driven models and to provide better advice to clients.

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Operations Research Analyst

Operations Research Analysts use mathematical and analytical techniques to solve business problems. They work in a variety of industries, including manufacturing, logistics, and healthcare. This course may be useful for Operations Research Analysts who want to develop a stronger understanding of project valuation and the capital budgeting process. This knowledge can be used to develop more effective solutions to business problems.

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Software Engineer

Software Engineers design, develop, and maintain software systems. They work in a variety of industries, including technology, finance, and healthcare. This course may be useful for Software Engineers who want to develop a stronger understanding of project valuation and the capital budgeting process. This knowledge can be used to develop more efficient and effective software systems.

See salaries and explore the career path for Software Engineer

Reading list

We've selected 14 books that we think will supplement your learning. Use these to develop background knowledge, enrich your coursework, and gain a deeper understanding of the topics covered in Project Valuation and the Capital Budgeting Process.

Principles of Corporate Finance

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Provides a comprehensive overview of capital budgeting techniques, including net present value, internal rate of return, and payback period analysis. It classic text in the field and is widely used as a textbook in business schools.

Project Valuation and the Capital Budgeting Process

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What's inside

Syllabus

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Reviews summary

Project valuation and capital budgeting essentials

Activities

Career center

Reading list

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