
#2




You are currently given certain expenses that MMCL is projecting that you may incur as a result of purchasing the mine.
But what if there are more expenses than the projected? That's what contingency allowance is for. So if there is a 10 percent contingency allowance, that means they are allowing for 10 percent extra expenses on each expense that is listed. 
#7




I might not be remembering this right, but wasn't the 15% contingency already calculated in the spreadsheet given? Not getting your confusion on how to calculate it.
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#9




Quote:
1) Calculate PV using discount rate of X% assuming 15% contingency 2) Calculate PV using discount rate of X% assuming no contingency, but Y% inflation. Seems like they forgot the third scenario (what is most likely to happen), 3) Calculate PV using discount rate of X% with 15% contingency and Y% inflation rate. 
#10




Quote:
I try to figure out one question in the exercise which indicate that determine the inflation rate in order to get 15% contingency allowance. Therefore I think it is necessary to clarify all independent variable of the 15% contingency allowance.Something like 15%=f(x,y,z...) and what x,y,z are. 
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