We started this session by looking at to how taking an equity perspective can alter how you measure returns and cash flows, and alter the hurdle rate you use, using an iron ore project for Vale as illustration. We also looked looked at an acquisition as a really big project, and argued that the same rules should apply to acquisitions as to regular projects. The cash flows should include any side benefits and costs and the cost of capital you use should reflect the risk of the project (target company), not the entity looking at the project (acquiring firm). We moved on to comparing NPV versus IRR as decision rules, and why they might yield different answers for mutually exclusive projects, of both same and different lives.
Slides: [ Ссылка ]
Post class test: [ Ссылка ]
Post class test solution: [ Ссылка ]
