Methods of Financial Modelling

• Author(s) / Creator(s)

  • Sandra Katharina Fahl

• A variety of financial modelling methods exist to predict the profitability of an investment. A financial analysis consists at least of a detailed cash flow model, a risk assessment and a sensitivity analysis of the cash flow model which must be included. Discounted cash flow models are created by calculating the Net Present Value of the Investment or the Internal Rate of Return of the Investment. These discounted cash flow models take the time value of money into account. Especially in the mining industries risk-adjusted discounting rates are used to increase the validity of the financial assessment of a potential investment.

  The case study presented in this paper demonstrates the steps that are done during a financial analysis of two potential investments and outlines how the decision making process is influenced by assumptions.

• Date created

  2018-01-01

• Subjects / Keywords

  • Dynamic and static financial models
  • financial risk assesment
  • investment analysis
  • case study example investment in copper mines

• Type of Item

  Research Material

• DOI

  https://doi.org/10.7939/r3-kfsa-g949

• License

  Attribution-NonCommercial 4.0 International