NPV Simulation

In the simulation, participants will:

• Analyze detailed business cases for several potential investment projects.

• Build financial models to project unlevered free cash flows.

• Determine an appropriate discount rate based on provided company and market data.

• Calculate NPV, IRR, and other metrics for each project.

• Perform sensitivity and scenario analysis on key drivers.

• Debate the strategic merits and risks of each proposal within their team.

• Negotiate for capital allocation under budget constraints.

• Present and justify their final investment portfolio to the "Board".

• Apply DCF/NPV methodology to realistic business investment scenarios.

• Interpret investment metrics (NPV, IRR) to make accept/reject decisions.

• Evaluate the qualitative and strategic factors beyond the numbers.

• Synthesize multiple projects into a value-maximizing capital budget under constraints.

• Develop skills in financial modeling, assumption-based debate, and persuasive communication of financial recommendations.

1. Briefing and Setup Instructors assign teams and launch the simulation. Teams access their digital dashboard containing a set of confidential investment proposals and market data.

** 2. Financial Modeling & Initial Valuation** Teams build DCF models from scratch for each project, forecasting cash flows and determining the appropriate risk-adjusted discount rate to calculate baseline NPV and IRR.

3. First-Round Capital Allocation Teams submit their initial investment rankings. The instructor then imposes a strict capital budget, forcing teams to prioritize and form a high-value project portfolio within the constraint.

4. Market Volatility and Scenario Update A new simulation round is triggered. Instructors release new economic data or competitive intelligence. Teams must re-evaluate assumptions, run sensitivity analysis, and adjust their models accordingly.

5. Final Portfolio Submission and Rationale Teams submit their final, optimized capital allocation plan. They must also provide a concise written rationale, defending their selections based on both financial metrics and strategic reasoning.

6. Automated Scoring and Results The simulation platform automatically calculates the total NPV generated by each team’s final portfolio. A live leaderboard ranks all teams based on value creation.

7. Instructor-Led Debrief and Learning Synthesis The competitive results set the stage for a comprehensive debrief. The instructor facilitates discussion on key decisions, common pitfalls, and connects the practical experience directly to core capital budgeting theory.

• What level of finance knowledge is required? Participants should have a basic understanding of financial concepts like cash flows, time value of money, and introductory corporate finance. The simulation is ideal for MBA students, finance undergraduates, and early-career professionals in roles involving business case analysis.

• Is this a solo or team-based simulation? It is primarily designed as a team-based simulation to foster debate, negotiation, and collective decision-making, mirroring real corporate environments. It can be adapted for individual use.

• How long does the simulation take to complete? A standard implementation runs over 2-3 hours, including introduction, team analysis, decision rounds, and instructor debrief. It can be extended for deeper analysis or condensed for shorter workshops.

• What makes this simulation different from a standard NPV Excel exercise? Unlike a static spreadsheet, this simulation introduces dynamic elements: new information, capital constraints, strategic trade-offs, and sometimes competitive elements from other teams, forcing participants to adapt their analysis and priorities.

• Can the simulation be customized for our specific industry? Yes, FINSIMCO can often customize project examples, financial parameters, and industry contexts to align with your organization's or program's focus area.

• Do participants need prior experience with financial modeling? No, the simulation is designed to be accessible. Guidance is provided, and the focus is on the logic of the analysis rather than advanced Excel. It serves as an excellent modeling primer.

• How is the performance of participants assessed? Performance is quantitatively assessed by the NPV generated by their final project portfolio. Instructors can also evaluate the quality of the team's submitted analysis, the rationale behind their decisions, and their participation in the debrief discussion.

• Depth and logic of scenario analysis

• Clarity, coherence, and persuasiveness of the valuation memo and presentation

• Ability to adapt and revise valuations in light of news shocks or changes

• Collaboration, division of work, integration of roles, and final coherence

• Rating by peers and self-reflection on approach and decisions