Investment Post Mortem And The Debt Equity Tradoff

In this session, we looked at how looking at projects that are already in place can help both improve the investing process and to make better decisions going forward. We then turned our attention to the financing principle, and the trade off between debt and equity.

Slides: http://www.stern.nyu.edu/

actual cash flows

Session 16: Investment Post Mortem and the Debt Equity Tradoff

Transcript

So let’s finish up. On investment analysis, so far we’ve talked about where they can invest right. Look at the net present value of it’s greater than zero except the investment of less than zero reject investment. And if everybody followed the rules every investment should be a good one. I mean I’m sure that even the worst investment in the face of the earth there is some net present value analysis that somebody has done that showed a positive net present that. To today want to mop up. So you’ve taken a project let’s say a 10 year project two years into the project. And things are different from what you expected they could be higher or lower. And it makes sense to actually look at existing projects.

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