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UBC Theses and Dissertations

Sensitivity analysis of capital projects Poveda, David


This thesis presents a very generalized model useful in the economic evaluation of capital projects. Net Present Value and the Internal Rate of Return are used as the performance measures. A theoretical framework to perform sensitivity analysis including bivariate analysis and sensitivity to functional forms is presented. During the development of the model, emphasis is given to the financial mechanisms available to fund large capital projects. Also, mathematical functions that can be used to represent cash flow profiles generated in each project phase are introduced. These profiles are applicable to a number of project types including oil and gas, mining, real estate and chemical process projects. Finally, a computer program has been developed which treats most of the theoretical concepts explored in this thesis, and an example of its application is presented. This program constitutes a useful teaching tool.

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