The course deals with decision analysis and real investement in companies and under uncertainty. The course will have a predominance of theory and the main part of the course deals with understanding and using different approaches to analyse and model decisions under uncertainty. This also includes calulating present values of projects with real options. This will at a later stage be used in decision making. A number of stylized problems and models with a simple structure, but still with important general results, are used.

After the course the student will be able to:

- make decisions and investment decisions where uncertainty is thoroughly evaluated, quantified and analyzed.

- use different approaches to evaluate uncertainty at project and portfolio level

- link project evaluation to capital market models (capital asset pricing model CAPM and state preference model SPM)

- decide which analysis level that is the most appropriate with respect to relevant risk and target group

- model and analyze investments when there are possibilities to adapt decisions as more information becomes available (using stochastic dynamic programming)

- identify, model, analyze and, to some extent, determine the value of real options

- analyze investment choices when capital is limited using linear programming

- discuss and explain how capital structure can affect investement decision and result in conflict between share holder and creditors