EFN507 Advanced Capital Budgeting
To view more information for this unit, select Unit Outline from the list below. Please note the teaching period for which the Unit Outline is relevant.
| Unit code: | EFN507 |
|---|---|
| Prerequisite(s): | EFN412 |
| Equivalent(s): | EFX507 |
| Credit points: | 12 |
| Timetable | Details in HiQ, if available |
| Availabilities |
|
| Domestic tuition unit fee | $4,596 |
| International unit fee | $6,180 |
Unit Outline: Semester 2 2026, Gardens Point, Internal
| Unit code: | EFN507 |
|---|---|
| Credit points: | 12 |
| Pre-requisite: | EFN412 |
| Equivalent: | EFX507 |
| Coordinator: | Daniel Smith | d4.smith@qut.edu.au |
Overview
Capital budgeting is an important aspect of a firm's financial management. As capital budgeting concerns the firm's long-lived assets, decisions made in this area are likely to impact upon the firm well into the future and have much to do with its long-term performance. This unit builds on the foundational finance knowledge, extending it to the context of making capital budgeting decisions.
Learning Outcomes
On successful completion of this unit you will be able to:
- Analyse complex real world situations and select appropriate capital budgeting techniques taking into account the benefits and limitations of each technique. [KS 1.2, HO 2.1]
- Apply capital budgeting theories and technical skills for decision making in conditions of certainty and uncertainty. [KS 1.1,1.2; HO 2.1, 2.2]
- Identify and discuss the complexities of corporate capital budgeting decisions and also empirical evidence relating to the corporate decisions. [KS 1.1, HO 2.2]
Content
The focus of this course is to provide a greater understanding of corporate finance theory and further insights into how the corporate finance theory applies in the real world. Successful completion of this course enhances students' ability to apply the knowledge and the tools in corporate decisions, such as cash flow forecasting, financing decisions, project valuation, etc., and to construct written work on capital budgeting that is logically and professionally presented.
This unit addresses the following topics:
- Overview of capital budgeting
- Investment decisions (Time value of money, Capital investment decisions)
- Cost of capital calculations
- Dividend Imputation
- Capital structure decisions
- Financial options
- Real options
- Mergers and acquisitions and corporate restructuring
QUT Business Capabilities (Postgraduate)
The content and assessment in this unit are aligned to a selection of the following set of QUT Business Capabilities, also known as Assurance of Learning Goals (AoLs). Developing these capabilities will assist you to meet the desired graduate outcomes set at QUT and equip you with the knowledge and skills to succeed in your chosen career.
Knowledge & Technical Skills (KS)
1.1 Demonstrate and apply integrated and advanced discipline and professional practice knowledge, including knowledge of relevant research principles and methods.
1.2 Apply technical, technological and technical research skills to organise and interpret discipline knowledge, including theory and practice, to investigate business issues.
Higher Order Thinking Skills (HO)
2.1 Critically investigate real world business issues and problems drawing on analysis, evaluation and synthesis of discipline knowledge, including theory and practice.
2.2 Exercise creativity and intellectual independence and make informed decisions and judgements in planning, designing, and executing strategic and research-based responses to address real world issues and problems.
Professional Communication (PC)
3.1 Use information literacy skills and communicate effectively and professionally in written forms and using media appropriate for diverse purposes, contexts and audiences.
3.2 Use information literacy skills and communicate effectively and professionally in oral forms appropriate for diverse purposes, contexts and audiences.
Teamwork & Self (TS)
4.1 Exercise self-reflection and accountability in applying knowledge and skills for own learning and effective practice.
4.2 Apply teamwork knowledge and skills for effective collaboration across a range of complex activities and contexts.
Social, Ethical & Global Understanding (SE)
5.1 Demonstrate and apply knowledge of ethical and legal principles and practices of business in critically analysing and effectively responding to complex business issues.
5.2 Demonstrate and apply knowledge of socially responsible behaviour in analysing and addressing business issues and critically reflect on the responsibilities and impacts of organisations in national and international business contexts.
Learning Approaches
The unit is a combination of formal 2-hour lectures and 1-hour tutorials. Lectures will involve covering both theoretical and applied aspects of capital budgeting. The lectures also provide numerical examples and real-world examples to demonstrate the applications of the theories. In tutorials, students will undertake a range of activities, including solving problems and case studies. Tutorial tasks and activities are designed to assist students to apply contents from lectures to practical examples. Students will be expected to prepare for the class by reading the assigned materials and working through assigned tutorial questions. In addition, students are encouraged to participate in class discussions.
Feedback on Learning and Assessment
Students will receive feedback in various forms throughout the semester which may include:
- Informal: worked examples, such as verbal feedback in class, personal consultation
- Formal: in writing, such as checklists (e.g. criteria sheets), written commentary
- Direct: to individual students, either in written form or in consultation
- Indirect: to the whole class
Assessment
Overview
The assessment in EFN507 consists of two components designed to test both technical and conceptual mastery of advanced capital budgeting. The major task is a case study, worth 60% of the final grade, which combines a quantitative and written component. In the quantitative component, students build an Excel-based capital budgeting model, including forecasting cash flows, estimating a discount rate, conducting net present value (NPV) analysis, and assessing risk using Monte Carlo simulation. In the written component, students write a critical essay evaluating how risk premia and cost-of-capital adjustments are applied in practice, linking theory to real-world or policy contexts.
The remaining assessment is a final exam, worth 40% of the final grade, which assess understanding and application of capital budgeting concepts, analytical techniques, and decision-making under uncertainty. Together, these assessments evaluate students’ ability to analyse complex financial decisions, apply theory to practical situations, and communicate insights effectively.
The assessment in this unit aims to support your achievement of the unit learning outcomes and course assurance of learning goals. The assessment has been designed in order to allow you to:
- receive feedback on your learning as you progress toward the development of knowledge, understanding, skills and attitudes (formative assessment);
- demonstrate your learning in order to achieve a final grade (summative assessment).
Unit Grading Scheme
7- point scale
Assessment Tasks
Assessment: Case Study
You will undertake a case study to generate a detailed capital budgeting model for an operating business. You will be required to determine several inputs for the model, stress test those inputs and examine potential outcomes under different market scenarios.
The ethical and responsible use of generative artificial intelligence (GenAI) tools is authorised in this assessment. See the relevant assessment details in Canvas for specific guidelines.
This assignment is eligible for the 48-hour late submission period and assignment extensions.
Formative or Summative: Formative and Summative
Business Capabilities (AoL goals): KS (1.1), KS (1.2), HO (2.1), HO (2.2)
Assessment: Final Exam
This examination will assess your understanding of all topics covered throughout semester including your ability to apply this understanding to workplaces issues.
The use of generative artificial intelligence (GenAI) tools is prohibited during this assessment.
Refer to the Generative AI and assessment website (https://qut.to/gojdn).
This invigilated examination requires attendance on campus or at an assessment centre, regardless of your attendance mode for the unit.
This assessment item is Verified Identity Assessment. Requirements are provided on the Unit Canvas site.
The late submission period does not apply, and no assignment extensions are available.
Formative or Summative: Formative and Summative
Business Capabilities (AoL goals): KS (1.1), KS (1.2), HO (2.1), HO (2.2)
Academic Integrity
Academic integrity is a commitment to undertaking academic work and assessment in a manner that is ethical, fair, honest, respectful and accountable.
The Academic Integrity Policy sets out the range of conduct that can be a failure to maintain the standards of academic integrity. This includes, cheating in exams, plagiarism, self-plagiarism, collusion and contract cheating. It also includes providing fraudulent or altered documentation in support of an academic concession application, for example an assignment extension or a deferred exam.
You are encouraged to make use of QUT’s learning support services, resources and tools to assure the academic integrity of your assessment. This includes the use of text matching software that may be available to assist with self-assessing your academic integrity as part of the assessment submission process.
Breaching QUT’s Academic Integrity Policy or engaging in conduct that may defeat or compromise the purpose of assessment can lead to a finding of student misconduct (Code of Conduct – Student) and result in the imposition of penalties under the Management of Student Misconduct Policy, ranging from a grade reduction to exclusion from QUT.
Resources
Resource Materials
Prescribed text(s)
Brealey, Myers and Allen (2023) Principles of Corporate Finance, 14th Edition, McGraw Hill.
Risk Assessment Statement
There are no out-of-the-ordinary risks associated with learning and teaching activities in this unit.
Standards/Competencies
This unit is designed to support your development of the following standards\competencies.
QUT Business Capabilities (Postgraduate)
HO (2.1): Critical Analysis
Relates to: ULO1, ULO2, ULO3, Case Study, Final Exam
HO (2.2): Independent Judgement and Decision-Making
Relates to: ULO2, Case Study, Final Exam
KS (1.1): Discipline and Professional Practice Knowledge
Relates to: ULO2, ULO3, Case Study, Final Exam
KS (1.2): Technical, Technological and Research Skills
Relates to: ULO1, ULO2, Case Study, Final Exam
Course Learning Outcomes
This unit is designed to support your development of the following course/study area learning outcomes.BS11 Master of Business
- Demonstrate and apply integrated and advanced discipline and professional practice knowledge, including knowledge of relevant research principles and methods.
Relates to: ULO2, ULO3 - Apply technical, technological and technical research skills to organise and interpret discipline knowledge, including theory and practice, to investigate business issues.
Relates to: ULO1, ULO2 - Critically investigate real world business issues and problems drawing on analysis, evaluation and synthesis of discipline knowledge, including theory and practice.
Relates to: ULO1, ULO2, ULO3 - Exercise creativity and intellectual independence and make informed decisions and judgements in planning, designing, and executing strategic and research-based responses to address real world issues and problems.
Relates to: ULO2
Unit Outline: Semester 2 2026, Online
| Unit code: | EFN507 |
|---|---|
| Credit points: | 12 |
| Pre-requisite: | EFN412 |
| Equivalent: | EFX507 |
Overview
Capital budgeting is an important aspect of a firm's financial management. As capital budgeting concerns the firm's long-lived assets, decisions made in this area are likely to impact upon the firm well into the future and have much to do with its long-term performance. This unit builds on the foundational finance knowledge, extending it to the context of making capital budgeting decisions.
Learning Outcomes
On successful completion of this unit you will be able to:
- Analyse complex real world situations and select appropriate capital budgeting techniques taking into account the benefits and limitations of each technique. [KS 1.2, HO 2.1]
- Apply capital budgeting theories and technical skills for decision making in conditions of certainty and uncertainty. [KS 1.1,1.2; HO 2.1, 2.2]
- Identify and discuss the complexities of corporate capital budgeting decisions and also empirical evidence relating to the corporate decisions. [KS 1.1, HO 2.2]
Content
The focus of this course is to provide a greater understanding of corporate finance theory and further insights into how the corporate finance theory applies in the real world. Successful completion of this course enhances students' ability to apply the knowledge and the tools in corporate decisions, such as cash flow forecasting, financing decisions, project valuation, etc., and to construct written work on capital budgeting that is logically and professionally presented.
This unit addresses the following topics:
- Overview of capital budgeting
- Investment decisions (Time value of money, Capital investment decisions)
- Cost of capital calculations
- Dividend Imputation
- Capital structure decisions
- Financial options
- Real options
- Mergers and acquisitions and corporate restructuring
QUT Business Capabilities (Postgraduate)
The content and assessment in this unit are aligned to a selection of the following set of QUT Business Capabilities, also known as Assurance of Learning Goals (AoLs). Developing these capabilities will assist you to meet the desired graduate outcomes set at QUT and equip you with the knowledge and skills to succeed in your chosen career.
Knowledge & Technical Skills (KS)
1.1 Demonstrate and apply integrated and advanced discipline and professional practice knowledge, including knowledge of relevant research principles and methods.
1.2 Apply technical, technological and technical research skills to organise and interpret discipline knowledge, including theory and practice, to investigate business issues.
Higher Order Thinking Skills (HO)
2.1 Critically investigate real world business issues and problems drawing on analysis, evaluation and synthesis of discipline knowledge, including theory and practice.
2.2 Exercise creativity and intellectual independence and make informed decisions and judgements in planning, designing, and executing strategic and research-based responses to address real world issues and problems.
Professional Communication (PC)
3.1 Use information literacy skills and communicate effectively and professionally in written forms and using media appropriate for diverse purposes, contexts and audiences.
3.2 Use information literacy skills and communicate effectively and professionally in oral forms appropriate for diverse purposes, contexts and audiences.
Teamwork & Self (TS)
4.1 Exercise self-reflection and accountability in applying knowledge and skills for own learning and effective practice.
4.2 Apply teamwork knowledge and skills for effective collaboration across a range of complex activities and contexts.
Social, Ethical & Global Understanding (SE)
5.1 Demonstrate and apply knowledge of ethical and legal principles and practices of business in critically analysing and effectively responding to complex business issues.
5.2 Demonstrate and apply knowledge of socially responsible behaviour in analysing and addressing business issues and critically reflect on the responsibilities and impacts of organisations in national and international business contexts.
Learning Approaches
The unit is a combination of formal 2-hour lectures and 1-hour tutorials. Lectures will involve covering both theoretical and applied aspects of capital budgeting. The lectures also provide numerical examples and real-world examples to demonstrate the applications of the theories. In tutorials, students will undertake a range of activities, including solving problems and case studies. Tutorial tasks and activities are designed to assist students to apply contents from lectures to practical examples. Students will be expected to prepare for the class by reading the assigned materials and working through assigned tutorial questions. In addition, students are encouraged to participate in class discussions.
Feedback on Learning and Assessment
Students will receive feedback in various forms throughout the semester which may include:
- Informal: worked examples, such as verbal feedback in class, personal consultation
- Formal: in writing, such as checklists (e.g. criteria sheets), written commentary
- Direct: to individual students, either in written form or in consultation
- Indirect: to the whole class
Assessment
Overview
The assessment in EFN507 consists of two components designed to test both technical and conceptual mastery of advanced capital budgeting. The major task is a case study, worth 60% of the final grade, which combines a quantitative and written component. In the quantitative component, students build an Excel-based capital budgeting model, including forecasting cash flows, estimating a discount rate, conducting net present value (NPV) analysis, and assessing risk using Monte Carlo simulation. In the written component, students write a critical essay evaluating how risk premia and cost-of-capital adjustments are applied in practice, linking theory to real-world or policy contexts.
The remaining assessment is a final exam, worth 40% of the final grade, which assess understanding and application of capital budgeting concepts, analytical techniques, and decision-making under uncertainty. Together, these assessments evaluate students’ ability to analyse complex financial decisions, apply theory to practical situations, and communicate insights effectively.
The assessment in this unit aims to support your achievement of the unit learning outcomes and course assurance of learning goals. The assessment has been designed in order to allow you to:
- receive feedback on your learning as you progress toward the development of knowledge, understanding, skills and attitudes (formative assessment);
- demonstrate your learning in order to achieve a final grade (summative assessment).
Unit Grading Scheme
7- point scale
Assessment Tasks
Assessment: Case Study
You will undertake a case study to generate a detailed capital budgeting model for an operating business. You will be required to determine several inputs for the model, stress test those inputs and examine potential outcomes under different market scenarios.
The ethical and responsible use of generative artificial intelligence (GenAI) tools is authorised in this assessment. See the relevant assessment details in Canvas for specific guidelines.
This assignment is eligible for the 48-hour late submission period and assignment extensions.
Formative or Summative: Formative and Summative
Business Capabilities (AoL goals): KS (1.1), KS (1.2), HO (2.1), HO (2.2)
Assessment: Final Exam
This examination will assess your understanding of all topics covered throughout semester including your ability to apply this understanding to workplaces issues.
The use of generative artificial intelligence (GenAI) tools is prohibited during this assessment.
Refer to the Generative AI and assessment website (https://qut.to/gojdn).
This invigilated examination requires attendance on campus or at an assessment centre, regardless of your attendance mode for the unit.
This assessment item is Verified Identity Assessment. Requirements are provided on the Unit Canvas site.
The late submission period does not apply, and no assignment extensions are available.
Formative or Summative: Formative and Summative
Business Capabilities (AoL goals): KS (1.1), KS (1.2), HO (2.1), HO (2.2)
Academic Integrity
Academic integrity is a commitment to undertaking academic work and assessment in a manner that is ethical, fair, honest, respectful and accountable.
The Academic Integrity Policy sets out the range of conduct that can be a failure to maintain the standards of academic integrity. This includes, cheating in exams, plagiarism, self-plagiarism, collusion and contract cheating. It also includes providing fraudulent or altered documentation in support of an academic concession application, for example an assignment extension or a deferred exam.
You are encouraged to make use of QUT’s learning support services, resources and tools to assure the academic integrity of your assessment. This includes the use of text matching software that may be available to assist with self-assessing your academic integrity as part of the assessment submission process.
Breaching QUT’s Academic Integrity Policy or engaging in conduct that may defeat or compromise the purpose of assessment can lead to a finding of student misconduct (Code of Conduct – Student) and result in the imposition of penalties under the Management of Student Misconduct Policy, ranging from a grade reduction to exclusion from QUT.
Resources
Resource Materials
Prescribed text(s)
Brealey, Myers and Allen (2023) Principles of Corporate Finance, 14th Edition, McGraw Hill.
Risk Assessment Statement
There are no out-of-the-ordinary risks associated with learning and teaching activities in this unit.
Standards/Competencies
This unit is designed to support your development of the following standards\competencies.
QUT Business Capabilities (Postgraduate)
HO (2.1): Critical Analysis
Relates to: ULO1, ULO2, ULO3, Case Study, Final Exam
HO (2.2): Independent Judgement and Decision-Making
Relates to: ULO2, Case Study, Final Exam
KS (1.1): Discipline and Professional Practice Knowledge
Relates to: ULO2, ULO3, Case Study, Final Exam
KS (1.2): Technical, Technological and Research Skills
Relates to: ULO1, ULO2, Case Study, Final Exam
Course Learning Outcomes
This unit is designed to support your development of the following course/study area learning outcomes.BS11 Master of Business
- Demonstrate and apply integrated and advanced discipline and professional practice knowledge, including knowledge of relevant research principles and methods.
Relates to: ULO2, ULO3 - Apply technical, technological and technical research skills to organise and interpret discipline knowledge, including theory and practice, to investigate business issues.
Relates to: ULO1, ULO2 - Critically investigate real world business issues and problems drawing on analysis, evaluation and synthesis of discipline knowledge, including theory and practice.
Relates to: ULO1, ULO2, ULO3 - Exercise creativity and intellectual independence and make informed decisions and judgements in planning, designing, and executing strategic and research-based responses to address real world issues and problems.
Relates to: ULO2