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The course is designed for managers, engineers, geologists, land men, scientists, accountants and other professionals concerned with measuring the economically equivalent value of investment opportunities and are interested in being able to complete an economic evaluation of a mineral deposit (or almost anything), compare its economic value to that of similar others and make an informed investment decision. This is a staple of the Colorado School of Mines curriculum and is highly recommended by industry world-wide. Participants gain exposure to time value of money, decision criteria, their proper application and related issues concerning the proper handling of inflation and uncertainty in modeling.
Wednesday: February 25, 2015
Time Value of Money, Discount Rates and Decision Criteria: (Chapters 1-3)
You will learn to apply the concepts of time value of money in calculating rate of return (internal rate of return), net present value, ratios and other criterion. Other topics include understanding calculator and spreadsheet functions, graphical approaches illustrating the meaning of decision criteria and common methods used to determine an appropriate discount rate. Evaluating service producing alternatives will be presented including cost analysis and incremental calculations.
Thursday: February 26, 2015
Application of Decision Criteria, Inflation: (Chapters 4-5)
The application of decision criteria to mutually exclusive and non-mutually exclusive alternatives will be reviewed. This discussion will also introduce related problems concerning cash flow streams, exhibiting a cost-income-cost pattern and the subsequent dual rates of return and the meaning of economic results. Application of inflation as it relates to escalated (or current) and constant (or real) dollar analyses will be introduced.
Friday Morning: February 27, 2015
Inflation, Risk, Sensitivity Analysis, and After-Tax Cash Flow: (Chapters 5-6)
Continued discussion on inflation will focus on understanding how this important parameter may impact the type of dollars and the appropriate discount rate in escalated and constant dollar calculations. Sensitivity analyses addressing uncertainty are explored along with an introduction to quantify risk through expected value calculations.
The course is structured around an open discussion of examples followed by problem solving related to the example material. Students should bring paper, pencil and calculator to class each day. A financial calculator such as the HP10BII is ideal for class exercises. Smart phone apps are available for this model at very modest prices. Laptops with Excel represent and equally viable alternative for problem solving.