Sensitivity Analysis of Cash-Flow Factors to Discounted Rate of Return – A Decision Making Tool

A cash-flow factor is any figure acquired in an evaluation that effects the cash flow potential of an eventual operation. Table I is a list of some of these cash-flow factors. There are more, such as, the payments and penalties in a smelter schedule if the concentrate would be sent to a smelter. During an evaluation it is necessary to maintain a two-way flow of communication between the evaluation people and financing people. To accomplish this, it is necessary to translate the vocabulary of the evaluating people into the vocabulary of the financing people, or geologic and engineering jargon into dollars and cents. This is done by cash-flow studies in which cash-flow factors are input, which when logically manipulated using accepted rules and procedures of accounting, provide an output in dollars and cents.