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Lecture 4 Scenario Analysis

This document provides information about a course on project finance and financial modelling. It includes: 1. The course is part of the MBA program at the University School of Business, Department of Management, Chandigarh University. 2. The course objectives are to understand project financing frameworks, apply tools for risk mitigation, evaluate financing analysis techniques, structure financing for projects, and develop financial models. 3. It discusses scenario analysis as a technique to examine potential impacts of events on a business or project. Scenarios can range from best to worst case. This helps prepare for events and impacts.

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29 views11 pages

Lecture 4 Scenario Analysis

This document provides information about a course on project finance and financial modelling. It includes: 1. The course is part of the MBA program at the University School of Business, Department of Management, Chandigarh University. 2. The course objectives are to understand project financing frameworks, apply tools for risk mitigation, evaluate financing analysis techniques, structure financing for projects, and develop financial models. 3. It discusses scenario analysis as a technique to examine potential impacts of events on a business or project. Scenarios can range from best to worst case. This helps prepare for events and impacts.

Uploaded by

harsimran Kaur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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INSTITUTE –University School of

Business
DEPARTMENT -Management
MBA
Project Finance and Financial Modelling
: 22BAT-736
MSC: Dr. Rakhi Arora
Assistant Professor
Chandigarh University

DISCOVER . LEARN . EMPOWER

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Scenario Analysis

Course Outcome
Course Description Blooms
Outco Taxonomy
me Level
1 To understand the basic project financing framework, Understand/ Will be covered in this
concepts and process of project finance, Remember lecture
2 To apply the necessary qualitative and quantitative Apply
tools and techniques for mitigation of the project risk
3 To evaluate different project financing analysis Analyze
techniques to compare the outcomes of different
projects
4 To structure and appraise financing for large & Evaluate
medium projects
5 To utilise the understanding of financial modelling to Design/Create
develop financial models for projects
https://www.expertmile.com/
Scenario Analysis
• Scenario analysis is a technique that provides a
rational and structured way to analyze the future.

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Businesses can use it to examine different potential
impacts of negative and positive events, such as
• What are the possible impacts on the business of an economic slowdown?
• What happens to revenue and profitability if the cost of various raw materials
rises?
• What revenues might be generated by a new product line?
• How would the business be impacted by the unexpected market entry of new
competitors?

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Scenario analysis
• Scenario analysis doesn’t attempt to predict a single outcome from any of
these events. Instead, it examines a spectrum of different potential
situations and outcomes, typically ranging from a best-case to worst-case
scenario. Businesses can then conduct scenario planning to better prepare
for these events and their potential impacts.
•

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Cases in Scenario Analysis
• Base-case scenario: A baseline scenario based on current, commonly
accepted assumptions.
• Worst-case scenario: The most negative set of assumptions.
• Best-case scenario: The ideal projected scenario to achieve goals and
objectives.

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Benefits of Scenario Analysis
• It helps companies to manage risks more proactively by assessing the
impact of potential future events and situations.
• It can help businesses make better decisions by investigating the risks and
benefits of different options.
• The methodical approach to analyzing the future may enable companies to
spot opportunities or risks that might otherwise be overlooked.

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Challenges of Scenario Analysis
• Scenario analysis can be a time-consuming process that requires specific
skills and expertise, although modeling tools can help.
• It can be difficult to envision all possible scenarios, make realistic
assumptions and assign probabilities to them.

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Assessment Pattern

Components HT-1 HT-2 Assignment Surprise Business Quiz GD Forum Attendance Scaled
Test Marks
Max. Marks 10 10 6 4 4 4 2 40

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References
•Text Books:
•1. Edward Yescombe, Principles of Project Finance, Yecombe Consulting Ltd.,
Academic Press
•2. Michael Rees, Principles of Financial Modelling: Model Design and Best
Practices Using Excel and VBA , The Wiley Finance Series)

•Reference Book:-
•1. Edward Bodmer, Corporate and project finance modeling, Wiley Finance Series

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THANK YOU

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