Join Rudolph Rosenberg for an in-depth discussion in this video Capital and cash, part of Making Investment Decisions.
…Now let's look at capital and cash flows.…Every project starts with an investment and…is expected to generate money over time.…This materializes in people and companies spending and…receiving money during the lifetime of the project.…All those exchanges of money are called cash flows.…Because the cash flows out of your pocket when you…spend it, and into your pocket when you receive it.…It's important to note…that a cash flow can be either positive…or negative, depending on where the money is going.…
For example, the capital is a negative cash…flow since it's money coming out of your pocket.…The returns you would be getting from the…project on the contrary, are positive cash flows.…Now that we know what a cash flow is, we need to know where to find them.…The short answer is, in your business plan.…Hopefully, this is the first thing you did before kicking off your project to…ensure that you have a complete understanding…of the project and its chances of succeeding.…If you don't have one, then I suggest you prepare one.…
This course teaches the net present value (NPV) methodology, an investment evaluation formula used by countless publicly traded companies and financial analysts, in a way that makes it accessible and applicable to you—no finance background required. Rudolph Rosenberg explains what investments are, how they are measured, and what makes a good investment. Then he explores the NPV formula in depth, showing you how to evaluate your cash flows, choose a rate of return, and assess the risk of a particular investment. This all culminates in a look at how the principles of investment apply to three real-life scenarios that any individual or company might encounter.
- What is an investment?
- Understanding ROI
- What makes a good investment?
- Using the NPV formula
- Assessing risk
- Applying NPV to real-life situations