Figure A3: Financial model algorithm structure

Text description of figure

Figure A3 outlines the financial model algorithm structure as follows:

For a new location - Greenfields
1. Forecast preoperation capital expenditure
2. Apply relevant capilisation rates to preoperation capital expenditure and derive starting capital expenditure
3. Derive appropriate rate of returns (cost of capital) applicable to cashflows (on a pretax real (present day dollar) basis)
4. Forecast ongoing operating costs, aftercare and future capital expenditure requirements (on a pre tax, real basis)
5. Apply relevant discount rate to post operation cashflow (on a pre tax, real basis)
6. Establish "guess" indicative base cost of landfilling
7. Derive indicative base cost of landfilling by setting Net Present Value (NPV) to zero

For an existing operation - Brownfields
1. Derive current asset value as per FRS-3
2. Derive appropriate rate of return (cost of capital) applicable to the asset (on a pre tax, real basis)
3. Forecast ongoing operating costs, aftercare and future capital expenditure requirements (on a pre tax, real basis)
4. Apply relevant discount rate to post operation cashflow (on a pre tax, real basis)
5. Establish "guess" indicative base cost of landfilling
6. Derive indicative base cost of landfilling by setting Net Present Value (NPV) to zero