SM1.

21 Managerial Economics

Managerial Economics - 10.1

Welcome to session 10

Capital Budgeting and Risk Analysis

Dr. H. Stoessel

S A V

Managerial Economics 1999

Course Timetable
Week 1
Introduction Theory of the Firm

Managerial Economics - 10.2

Week 2
Demand Analysis Managerial Tools

Week 3
Demand and Theory of the consumer

Week 4
Demand Estimatioon

Week 5
Production and Cost Analysis

Week 6
Cost Theory and Estimation

Week 7
Market Structure

Week 8
Strategies and Pricing

Week 9 The Role of the Government

Week 10 Risk Analysis Capital Budgeting

Week 11
Tutorials

Week 12
Reserve Final Exam

Dr. H. Stoessel

S A V

Managerial Economics 1999

Objectives

Managerial Economics - 10.3

To examine managerial decisions under condition of uncertainty To understand the various steps involved in capital budgeting and investment decisions

Dr. H. Stoessel

S A V

Managerial Economics 1999

Risk and Uncertainty

Managerial Economics - 10.4

Case 13-1 Case 13-2

Dr. H. Stoessel

S A V

Managerial Economics 1999

Measuring Risks

Managerial Economics - 10.5

Probability Distribution Utility and Risk aversion Adjusting the Firms Value Decision trees and simulation

Dr. H. Stoessel

S A V

Managerial Economics 1999

Uncertainty

Managerial Economics - 10.6

Maximin Criterion The Minimax Regret Criterion Other

Dr. H. Stoessel

S A V

Managerial Economics 1999

Hedging

Managerial Economics - 10.7

Dr. H. Stoessel

S A V

Managerial Economics 1999

Capital Budgeting

Managerial Economics - 10.8

For investment categories: Replacements Cost reduction Output expansion New Products Government Regulations

Dr. H. Stoessel

S A V

Managerial Economics 1999

Capital Budgeting Process

Projecting Cash Flows Net Present Value Internal Rate of return

Managerial Economics - 10.9

Dr. H. Stoessel

S A V

Managerial Economics 1999

The Cost of Capital

The cost of debt the cost of equity

Managerial Economics - 10.10

Dr. H. Stoessel

S A V

Managerial Economics 1999