Uided-Reading-Based Assessment: Capital Budgeting Methods

Corporations engage with a wide variety of methods when it comes to capital budgeting and project evaluation and their assessment methods. The purpose of this short study is to identify and assess qualitatively the differences between the various methods that exist. Quantitative, theoretical and attendant numerical work is possible, but not essential to this task.

Readings can be drawn from wide variety of standard texts, but must include the following:
” Berk, J. and DeMarzo, P., Corporate Finance, Pearson, 2007.
” Brealey, R., Myers, S. and Allen, F, Corporate Finance, 8th Edition, McGraw-Hill, 2005.
” Ross, S., Westerfield, R. and Jaffe, J. Modern Financial Management, 8th Edition, McGraw-Hill, 2008.
The following text on Real Options, aimed at a managerial audience, may also be helpful:
” Amram, M. and Kulatilaka, N., Real Options, Harvard Business School Press, 1999.
Other texts and articles are permitted for inclusion by discussion with the module director.

For the various methods and techniques identified, the candidate should seek to present them in a systematic fashion and in particular attempt to critique the strengths and weaknesses of each method compared to each other.

From the discussion of the methods concerned, criteria for their evaluation should be identified and finally, at the end of the document, there should be an overall attempt to rank or grade the various methods identified on these criteria.

Worked practical example(s) of capital budgeting examples would be most advantageous in illustrating the methods identified in the work. Such examples may be based on actual projects with which the candidate is familiar, but this is not a requirement.

The Professor will be available for limited consultation and encourages early discussion of outline, content and potential draft submission before the final date.

The completed module report MUST NOT EXCEED 3,000 words, i.e. about 15-20 pages. (Please note that the word limit EXCLUDES tables, the list of references, and appendices containing illustrative and supporting material, but INCLUDES footnotes). Please make sure that all cited sources are properly referenced, and note that a soft copy will be required for submission for potential plagiarism checking.

(Module Director)
(Programme Director)