Students
ACST8029 – Capital Budgeting and Financial Modelling
2025 – Session 1, In person-scheduled-weekday, North Ryde
General Information
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| Unit convenor and teaching staff |
Unit convenor and teaching staff
Chi Truong
|
|---|---|
| Credit points |
Credit points
10
|
| Prerequisites |
Prerequisites
ACST6003 or admission to MActPrac
|
| Corequisites |
Corequisites
|
| Co-badged status |
Co-badged status
|
| Unit description |
Unit description
This unit covers established methods for the valuation and appraisal of investment projects and related financial decisions. It also covers the new 'real options approach' to investment appraisal, including the application of exotic options pricing formulae to real options using Microsoft Excel to build financial models, and introducing students to Visual Basic/Excel macros for financial modelling. |
Important Academic Dates
Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates
Learning Outcomes
On successful completion of this unit, you will be able to:
- ULO1: Understand current established methods for the valuation and appraisal of investment projects, their advantages and disadvantages and the development of financial models for this purpose.
- ULO2: Build the financial models and perform the calculations to implement these methods using microsoft excel.
- ULO3: Demonstrate an introductory understanding of the “real options approach” to investment appraisal.
- ULO4: Document a financial decision making problem and its solution using spreadsheet software and communicate the results to interested stakeholders.
Assessment Tasks
| Name | Weighting | Hurdle | Due |
|---|---|---|---|
| Skills development: Building financial models (2) | 25% | No | Week 5 |
| Skills development: Building financial models (1) | 25% | No | Week 10 |
| Formal and observed learning: Exam | 50% | No | Formal Exam Period |
Skills development: Building financial models (2)
Assessment Type 1: Quantitative analysis task
Indicative Time on Task 2: 25 hours
Due: Week 5
Weighting: 25%
The purpose of this assessment is to assess the skills and knowledge required to produce business evaluation for an organisation. You will build financial models and perform calculations to implement the models using Excel. Skills in focus: - Data Literacy - Digital Literacy [Excel] Deliverable: Written submission Individual assessment
On successful completion you will be able to:
- Build the financial models and perform the calculations to implement these methods using microsoft excel.
- Demonstrate an introductory understanding of the “real options approach” to investment appraisal.
- Document a financial decision making problem and its solution using spreadsheet software and communicate the results to interested stakeholders.
Skills development: Building financial models (1)
Assessment Type 1: Quantitative analysis task
Indicative Time on Task 2: 25 hours
Due: Week 10
Weighting: 25%
The purpose of this assessment is to assess the skills and knowledge required to produce business evaluation for an organisation. You will build financial models and perform calculations to implement the models using Excel. Skills in focus: - Data Literacy - Digital Literacy [Excel] Deliverable: Written submission Individual assessment
On successful completion you will be able to:
- Understand current established methods for the valuation and appraisal of investment projects, their advantages and disadvantages and the development of financial models for this purpose.
- Build the financial models and perform the calculations to implement these methods using microsoft excel.
- Document a financial decision making problem and its solution using spreadsheet software and communicate the results to interested stakeholders.
Formal and observed learning: Exam
Assessment Type 1: Examination
Indicative Time on Task 2: 31 hours
Due: Formal Exam Period
Weighting: 50%
The purpose of this assessment is for you to demonstrate the expertise they have gained in Capital Budgeting and Financial Modelling. You will participate in a 2-hour exam held during the University Examination period. Important information about the exam will be made available on the unit iLearn page. You should also review the MQ Exams website for general tips.
Deliverable: Formal exam Individual assessment
On successful completion you will be able to:
- Understand current established methods for the valuation and appraisal of investment projects, their advantages and disadvantages and the development of financial models for this purpose.
- Build the financial models and perform the calculations to implement these methods using microsoft excel.
- Demonstrate an introductory understanding of the “real options approach” to investment appraisal.
1 If you need help with your assignment, please contact:
- the academic teaching staff in your unit for guidance in understanding or completing this type of assessment
- the Writing Centre for academic skills support.
2 Indicative time-on-task is an estimate of the time required for completion of the assessment task and is subject to individual variation
Delivery and Resources
Classes:
- A 3-hour lecture / tutorial will be held each week.
- All lecture and tutorial exercises and solutions will be available on iLearn.
Textbooks:
There is no specific required text for this unit. Detailed lecture materials are provided. However the following books are useful references:
- Capital budgeting: Financial appraisals of investment projects by Dayananda et al (ISBN 0 521 52098 3).
- Financial Modeling by Simon Beninga (ISBN 0 262 02482 9)
Technology Used and Required
You will be required to use the teaching website, Excel and Word.
Unit Web Page
Course material is available on the learning management system (iLearn). To access the teaching website, go to http://ilearn.mq.edu.au and login using your usual login and password
Teaching and Learning Activities
- The unit is taught via lectures, tutorial exercises and the use of spreadsheet software for implementing models and calculations for the purpose of financial decision making.
- Each lecture is self-contained and structured according to the summary provided in the “weekly curriculum” section below. Students are expected to read the relevant lecture notes prior to the lecture, so that they are familiar with the material to be covered. This will greatly enhance your learning experience.
- Dealing with advanced material in our subject area requires a range of generic skills. This unit aims at developing such skills. The lectures and in particular the assignments and tutorial exercises are tailored to enhance critical analysis, problem-solving and creative thinking, comprehension, computing and writing skills.
- You should take the time to work on the problem sets, since they will tend to be similar in nature to the problems you see on the test and exam. Solutions will be provided.
- We cover many examples of financial valuation and decision making problems and how to solve these using spreadsheets. Our approach is one of learning by example and by practising using excel to solve financial decision making problems.
Unit Schedule
|
Week |
Lecture |
Topics |
|
1 |
1 |
Introduction to excel, introductory financial mathematics & functions. Translating mathematical formulae into excel code. Application to pricing bonds and bills. Excel implementation. |
|
2 |
2 |
Further topics in financial mathematics. Amortizing loans, annuities, leases & bonds. Excel implementation. |
|
3 |
3 |
Introduction to capital budgeting. Project cashflows and methods for their estimation. |
|
4 |
4 |
Elementary methods of forecasting. Matrix algebra and applications. Implementation in excel. |
|
5 |
5 |
Project appraisal using NPV, IRR, ARR, PP and other methods. Excel implementation |
|
6 |
6 |
Methods for estimating model parameters, Sensitivity and breakeven analysis. Case Studies |
|
7 |
7 |
mid semester exam |
|
8 |
8 |
Introduction to options and valuation via the Black Scholes model. |
|
9 |
9 |
Binomial option pricing methods and implementation in excel. |
|
10 |
10 |
Monte Carlo simulation modelling and financial applications. |
|
11 |
11 |
The "real options approach" to valuation of projects. |
|
12 |
12 |
Case Studies |
|
13 |
13 |
Case Studies and revision |
Policies and Procedures
Macquarie University policies and procedures are accessible from Policy Central (https://policies.mq.edu.au). Students should be aware of the following policies in particular with regard to Learning and Teaching:
- Academic Appeals Policy
- Academic Integrity Policy
- Academic Progression Policy
- Assessment Policy
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- Assessment Procedure
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- Special Consideration Policy
Students seeking more policy resources can visit Student Policies (https://students.mq.edu.au/support/study/policies). It is your one-stop-shop for the key policies you need to know about throughout your undergraduate student journey.
To find other policies relating to Teaching and Learning, visit Policy Central (https://policies.mq.edu.au) and use the search tool.
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Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/admin/other-resources/student-conduct
Results
Results published on platform other than eStudent, (eg. iLearn, Coursera etc.) or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit connect.mq.edu.au or if you are a Global MBA student contact globalmba.support@mq.edu.au
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Unit information based on version 2025.04 of the Handbook