Projects can fail or succeed based on cash flow. Yet many chemical engineers don鈥檛 truly understand cash flow or its role in project evaluation. In this course, you鈥檒l learn the principles of cash flow, ways to assess its value based on the concept of the time value of money (TVM), and how to use this knowledge to determine the value of projects.
You鈥檒l begin with a discussion of what cash flow is and the concepts of compounding and discounting. You鈥檒l also explore capital and capital structure, present value and rate of return. By the end of the course, you鈥檒l have a basic understanding of cash flow principles and how to apply them to any plant-related project.
After taking this course, you'll be able to:
- Define cash flow.
- Explain the principles of compounding and discounting.
- Discuss the importance of capital, capital structure and the weighted average cost of capital (WACC).
- Calculate present value and rate of return.
- Apply cash flow concepts to project evaluation.
Who Should Attend:
Course is recommended for all engineers involved in project evaluation and/or recommendations.
Lecture 1
鈥� Introduction and Goal of the course
鈥� What actually Is 鈥淐ash Flow鈥�
鈥� Importance of Cash Flow
鈥� Financial Statements
鈥� Three major reporting statements:
鈥� Balance Sheet 鈥� assets, liabilities and shareholders鈥� equity
鈥� Income Statement (profit & loss) - net income, EPS
鈥� Cash Flow Statement 鈥� sources and uses of cash; change in cash balance
鈥� Project Cash Flow
鈥� Time Value of Money
鈥� Compounding
鈥� Discounting
鈥� Timing of the cash flow
鈥� Type of compounding / discounting
鈥� Modeling issues
鈥� Cash Flow Timing
鈥� Discrete and Continuous Compounding/Discounting
鈥� Discrete Annual Discount Factors
鈥� Continuous Discount Factors
鈥� Class Exercise
鈥� Cash Flow Modelling
鈥� Present Value
鈥� Cost of Capital
鈥� 鈥淲eighted average cost of capital鈥� or WACC
Lecture 2
鈥� Introduction and Re-cap of Lecture 1
鈥� Net Present Value
鈥� Definition
鈥� Examples
鈥� Internal Rate of Return
鈥� NPV versus Discount Rate
鈥� Modeling in Excel
鈥� IRR, MIRR, XIRR
鈥� Profitability Index (PI)
鈥� Payback
鈥� Using Discounted Cash Flows to Value Companies
鈥� Conclusions and Wrap-up
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