Corporate Issuers And Equity

Capital Budgeting And NPV

Review NPV, IRR, payback, mutually exclusive projects, and cash-flow decision traps.

Video Production Brief

This lesson is scripted for a rendered Remotion cut. The page below shows the voiceover and animation beats that should drive production.

Lesson Script

0:00-0:15

Hook

Visual

Open on the common miss pattern, then isolate the decision the candidate must make under time pressure.

Voiceover

If using accounting income instead of cash flow, this topic starts to feel bigger than it is. We are going to make the decision visible.

0:15-0:40

Visual Model

Visual

Project cash-flow branches discount into present-value blocks, then route to accept/reject decisions.

Voiceover

First, build the picture. The goal is to see the moving parts before trying to memorize the rule.

0:40-1:05

High-Yield Pass

Visual

Highlight the two highest-payoff ideas and remove the details that do not change the answer.

Voiceover

NPV measures value added in currency units Then IRR can mislead with nonconventional or mutually exclusive projects

1:05-1:30

Trap Lab

Visual

Show two tempting answer paths, cross out the flawed one, and leave the reliable rule path on screen.

Voiceover

The tempting wrong answer usually comes from including sunk costs. We will name that trap before solving.

1:30-1:55

Repair Drill

Visual

End with one short drill prompt, a pause, and a clean reveal of the answer logic.

Voiceover

Your repair rep after this lesson is simple: identify relevant vs irrelevant cash flows in five project prompts.

Lesson Objective

Give students a project-decision map for corporate finance questions.

Visual Teaching Plan

Project cash-flow branches discount into present-value blocks, then route to accept/reject decisions.

High-Yield Map

  • NPV measures value added in currency units.
  • IRR can mislead with nonconventional or mutually exclusive projects.
  • Relevant cash flows are incremental after-tax cash flows.

Common Traps

  • Using accounting income instead of cash flow.
  • Including sunk costs.
  • Choosing IRR when NPV gives the correct ranking.

Repair Drills

  • Identify relevant vs irrelevant cash flows in five project prompts.
  • Compare NPV and IRR decisions for two projects.