The most comprehensive educational resources for finance

Corporate Finance Lecture 5: Risk and Return

This video is a part of online course on Corporate Finance by Professor Aswath Damodaran of NYU. This video discusses: Risk and Return Models The Capital Asset Pricing Model Mean-Variance Framework Importance of Diversification Risk: Diversifiable or not? Effects of Diversification Marginal Investor Analyzing Investor Bases The Market Portfolio Risk of an Individual Asset Limits

Corporate Finance Lecture 4: Conflicts of Interest

This video is a part of online course on Corporate Finance by Professor Aswath Damodaran of NYU. This video discusses: Alternative Corporate Governance System Choose a Different Objective Function Maximize Stock Prices The Stockholder Backlash The Hostile Acquisition Threat Independent Boards The bondholders’ Defense Against Stockholder Excesses The Financial market Response The Social Response The

Corporate Finance Lecture 3: Corporate Governance

This video is a part of online course on Corporate Finance by Professor Aswath Damodaran of NYU. This video discusses: Quality of corporate governance Overpaying on takeovers Control of the firm Shareholders’ vs Bondholders’ objectives Critiques of market efficiency Firms and society

Corporate Finance Lecture 2: Shareholders and Management

This video is a part of online course on Corporate Finance by Professor Aswath Damodaran of NYU. This video discusses: The project details Corporate Governance Analysis The Classical Viewpoint The objective in decision making Maximizing shareholder’s wealth Shareholder interests vs. Management interests

Corporate Finance Lecture 1 – Introduction

This video is a part of online course on Corporate Finance by Professor Aswath Damodaran of NYU. The video discusses: What is Corporate Finance? Course Objectives The Traditional Accounting Balance Sheet Financial View of the Firm First Principles of Corporate Finance

Problems with Financial Leveraging

Apart from equity capital, companies also use debt capital to expand their business. This process of adding debt to the firms funding for the purpose of acquiring more assets is called financial leverage. Generally, having some amount of debt is considered good for the company, as employing only equity can be expensive for the company.

Calculating Profitability Index of a Project

The profitability index, also known as the profit investment ratio, is calculated as the ratio of the present value of the future cash flows and the initial investment in the project. Since NPV is the difference between the present value of future cash flows and initial investment, the profitability index can also be expressed in

How to Calculate Discounted Payback Period

We learned that one of the drawbacks of payback period is that it does not consider time value of money. An alternative is to use the discounted payback period. The discounted payback period is the number of years it takes to recover the initial investment in terms of the present value of the cash flows.

How to Calculate Payback Period

The payback period of a project is defined as the number of years it takes for the project to recover its original investment. Let’s take a simple example to understand how payback period is calculated. Assume that a company invests $5,000 in a project, which generates the following cash flow in the next 5 years.