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  #1  
Old 12-18-2007, 03:03 PM
jh jh is offline
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Default Task 1(New FA) - only discussion about the task 1 is welcomed here. Thanks!

Since only a limited number of people are actually doing this one, we need to hold our hands together and use each other as resources. Can we throw in ideas here for Task 1?

I'll throw some ideas out first to see these are what you're thinking -

Assumptions - exchange rate - it doesn't look right to use a linearly changed exchange rate for the next 5 years

Gold Price - based on the model but the price seems to be the first of month of each quarter

The labor cost used fixed parameters plus a variable - gold price. This doesn't look OK to me.

Any ideas, please!

PS - Please post your complaints somewhere else.
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  #2  
Old 12-18-2007, 03:05 PM
proudpapa proudpapa is offline
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Hey jh,

I agree with the fact that currency exchange rate assumption could be improved. I was also thinking about the energy cost assumption and the fact that they only increase at the inflation rate.
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  #3  
Old 12-18-2007, 03:35 PM
jh jh is offline
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I agree with energy cost only increase with inflation is not a proper assumption. In fact, I think there are so many deterministic assumptions in this model which can be improved, do you think?

I don't think, at least so far, I haven't found anything related to the model other than assumptions that can be improved, have you noticed anything?
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  #4  
Old 12-18-2007, 03:43 PM
proudpapa proudpapa is offline
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Quote:
Originally Posted by jh View Post
I agree with energy cost only increase with inflation is not a proper assumption. In fact, I think there are so many deterministic assumptions in this model which can be improved, do you think?

I don't think, at least so far, I haven't found anything related to the model other than assumptions that can be improved, have you noticed anything?
I agree. I think it might be worth mentioning that with this type of long run projection, it would be beneficial to incorporate more stochastic components. However, at what cost? I know Task 4 is a sensitivity analysis of assumptions, so maybe only recommend these improvements for those assumptions that have a material affect on the outcomes.

I thought about talking about the different ideas I had for the updates in Task 1, and then in the Task 4 Sensitivity Analysis, actually evaluating them to see if they are worth doing.
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  #5  
Old 12-18-2007, 03:59 PM
jh jh is offline
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I'm thinking of the labor cost calculation. It is linked to the price of gold, but to a prior period. Is inflation justified by this? I mean, the current labor cost based on the previous gold prices? What do you think?
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  #6  
Old 12-18-2007, 04:09 PM
proudpapa proudpapa is offline
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I agree, this does not seem right. Wouldn't it be better to base the current labor costs on the current gold price, or an average of the four quarters immediately prior to the current one?
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  #7  
Old 12-18-2007, 04:16 PM
jh jh is offline
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That's what I'm thinking, at least take the average of the latest quarters, not from a year ago.

PS - It seems we're the only ones here. Do you want to set up a chat in the chatroom so we can IM each other?
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  #8  
Old 12-18-2007, 04:22 PM
proudpapa proudpapa is offline
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Sure, if I did it right, I'm in the New FA room
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  #9  
Old 12-18-2007, 04:31 PM
jh jh is offline
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OK. Since only a handful of people are here for the new FA, we decide to chat in the flashchat - New FA room. Please come join us! But only those who are actually working on it now. Thanks!
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  #10  
Old 12-18-2007, 07:10 PM
TheTruth7 TheTruth7 is offline
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Quote:
Originally Posted by jh View Post
That's what I'm thinking, at least take the average of the latest quarters, not from a year ago.

PS - It seems we're the only ones here. Do you want to set up a chat in the chatroom so we can IM each other?
I think you do make sense here. However, one could argue that there is a lag with respect to gold prices influencing labor costs. An 8 quarter lag may not be appropriate though.
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