A brief overview of various terms used in project economics and financial modeling is presented in this chapter in order to be familiar. These terms and definitions are referred to repeatedly throughout this book. We will not delve into the details but only present brief description of the (a) various variables used, (b) profitability indicators, (c) mathematical equations used to calculate the profitability indicators, and (d) using these profitability indicators to make investment decisions.
Financial modeling is the task of building an abstract representation (a model) of a real world financial situation. This is a mathematical model designed to represent (a simplified version of) the performance of ...
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