[MUSIC] In this course we learned a lot about how companies make financial investment decisions. In this summary video, I want to go over the key concepts that we learned. Really to emphasis what are the key ideas that you should take away from this course. What are the key concepts that you should not forget, okay? The first one is the notion of shareholder value, right? The idea that companies make decisions, financial and investment decisions that maximize the stock price. And we talked a lot about the fact that maximizing the stock price is not the perfect objective, but it is better than many alternatives. In particular, maximizing current profits. Okay, and remember that maximizing a stock price might create conflicts between shareholder value and social welfare, okay? That companies may need to address in some way. Okay, so shareholder value is not a perfect objective, mostly because of that. Companies live in a society where they might have to balance shareholder value with concerns about stakeholders, concerns about the environment, and other important concerns. Then we talked about the language of corporate finance. Okay, as we discussed in our course, accounting statements are like a book, right? But you have to learn how to learn how to read the language, how to read those words, okay? Accounting is the language of finance. So in our module one, we learned how to use accounting statements to measure fundamental corporate finance concepts. Such as liquidity, leverage, profitability and how to read the casual statement, okay. We learn this and we also learn how to avoid the both common pitfalls, okay. Such as using book value of equity, and other related issues. So remember that accounting is the language of finance and now, you should know how to read that. And we also learned how to write the book of corporate finance, right? Forecasting future financial statements is like writing our own book. Okay, we learned how to do some basic forecasting and then we used our forecasts to project and manage a company's long term and short term liquidity needs. Okay, this is a very important job that the chief financial officers, the corporate treasurers, real world managers have to deal with on a daily basis. And I believe that now you should know more about how companies make these financial planning decisions. Then we went to net present value, which is probably the most central concept in corporate finance, okay. Net present value is a very important calculation that allow us to measure the contribution of a new project, or a new acquisition to shareholder value, right? What this means is that, as long as we can compute an NPV, right? Then we have a number that allows us to make a decisions about an investment, a decision about financing or any other corporate decision. If a decision generates positive NPVs, NPV is positive, then it will increase shareholder wealth which means that the company should go for it. Okay, we learn how to use this principle to discuss investment and acquisition decisions, and to think about the pricing of M&A deals. On top of NPV, we talked about two additional tools that we use in investment analysis and corporate finance, which are the intended rate of return, and real options. The IRR is the percentage rate of return of a project, okay. So now you should know how to compute the IRR and you should also know that we cannot compute the IRR in some cases, okay. The cool thing about the IRR is that IRR and NPV should be equivalent in most cases. Okay, if the IRR is greater than discount rate, then the NPV should be zero. So we can think in terms of positive and NPV, but we can also think in terms of comparing the rate of return of decision with the discount rate of that decision. Okay, in addition, we learn that many investment decisions such as research and development awaiting have to be evaluated using a real option framework, okay. On top of computing NPV we have to think about which options are associated with this project. And we learned, in our course we learned how to use decision trees to compute the right NPV when investments come attached with real options. Okay, finally we learned how we measure risk using discount rates. Okay, and we learned how to use these discount rates to evaluate performance, right? So we estimated discount rates for real world companies using the weighted average cost of capital formula, and then we learned how to use the weighted average cost of capital to measure the performance either of the company as whole or the performance of existence investments of the company. So now you should be able to think about how to introduce risk into investment analysis and how to use the weighted average cost of capital to measure performance. Okay, and remember, that practice makes perfect both with guitar playing and also with corporate finance, right. As we finish this course you should keep applying the ideas that we learned in other business courses and also in real world situations. The corporate finance principles that we learned should make you better able to understand how companies should make investments and financing decisions. Thank you for taking this course. I really appreciate it. Okay, and I hope to see you in a future course.