(i) is based on
a set of best-estimate assumptions using existing economic,
agricultural, physiological fundamentals (population,
age distribution, existing
Obesity/Overweight and exercise
levels, fast-food consumption etc), known as a 'Base Case',
founded on inputs for the
Lifestyle Behaviour
and
Ascribed Economic Value
of the forecast 5,200 Pilot
Sample to produce a set of
likely results which estimates
'inter alia'
whether the
YELP SPV's projected
Capex
on
Human
Brownfield Infrastructure achieves
-
(I)
an
IRR
which
is
higher than the
hurdle rate
(required yield); and
(II) a positive NPV;
(ii)
applies (i)
above from the results of the
Pilot and
Primary Research Programme which
are fed in from
Return On YELP Capex Software;
(iii)
applies a discount rate to factor in that due to long term
inflation $1 in say five years time generally enjoys less
purchasing power than $1 today;
(iv) will incorporate 'Scenario
Testing' eg. 'Less Effective', 'Forecast' and 'More Effective' outcomes based
on the forecast
Materially Altered Lifestyle
being less than, equal to or better than forecast in the 'Base Case' (ie. will the
Pilot establish that the
5,200 Pilot
Sample benefit less than, equal to or more than
the 'Base Case') which can expeditiously display best & worst case extremes,
feasibility and risks;
(v)
will not initially incorporate
'Stress Testing' changes to the
fundamentals (ie reduced water supply, increased food costs,
higher energy costs, a disease outbreak or epidemic etc.) which
impact the
Ascribed Economic Value;
(vi)
might incorporate some 'Sensitivity Testing' to identify
the impact of changing one assumption, or perhaps a few linked
assumptions and appraise if the model is realistic, as users will generally have
a meaningful idea of the outcome
when they alter a
'Sensitivity'; and
(vii)
might incorporate some 'Probabilistic
Stochastic Testing' using random numbers to simulate a large
number of alternative scenarios that might transpire so as to calculate percentiles to get some idea of the
probability of different outcomes on
Materially Altered Lifestyle
and
Economic Return
On YELP Capex.
Forecast Return On YELP Capex
notes that the
Discussion
Paper
cites a recent US study
Prevention for a Healthier America
that utilised modelling to estimate that for every US$1 invested in "proven community-based disease prevention programs" (ie. increasing physical activity,
maintaining a
Healthy Diet and reducing smoking levels), the return on investment over and above the
$1 per head cost of the program would be US$5.60 within five years.
Wikipedia says
Financial modelling is
the task of building an abstract
representation (a model) of a
financial decision making
situation. This is a
mathematical model, such as a
computer simulation, designed to
represent (a simplified version
of) the performance of a
financial asset or a portfolio,
of a business, a
project, or any other form
of financial investment.
Financial modelling is a general
term that means different things
to different users. For some, it
means the development of a
mathematical model to predict a
fair equilibrium price for an
asset. For others, it means the
development of a mathematical
model and the associated
computer implementation to
simulate scenarios of financial
events, such as asset prices,
market movements, portfolio
returns and the like. Or it
might mean the development of
optimization models for managing
and controlling the risk of a
financial investment.
While there has been some debate
in the industry as to the nature
of financial modelling {http://www.amazon.co.uk/Practical-Financial-Optimization-Decision-Engineers/dp/1405132019/ref=sr_1_2?ie=UTF8&qid=1228944085&sr=1-2}:
whether it is a tradecraft, such
as welding, or a science, such
as metallurgy, the task of
financial modelling has been
gaining acceptance and rigor
over the years. Several
scholarly books have been
written on the topic, in
addition to numerous scientific
articles, and the definitive
series Handbooks in Finance by
Elsevier contains several
volumes dealing with financial
modelling issues.
There
are non-spreadsheet
software platforms available on
which to build financial models.
However, the vast proportion of
the market is spreadsheet-based,
and within this market
Microsoft Excel now has by
far the dominant position,
having overtaken
Lotus 1-2-3 in the 1990s.
See also definitions of
Return On YELP Capex Software,
Forecast Return On
YELP Capex
and
Section 18.