Recently, i work on Monte Carlo Simulation to predict possible outcome given certain amount of NPV, and specified amount of standard deviation. Monte Carlo simulation basically is a tool to predict specified amount of number in series of simulations given the deviation attached. This analysis is helpful to give us information the minimum and maximum outcome to our results.
In case of Net Present Value, this tool of analysis help us to estimate the possible outcome of NPV given swings in revenue. Thus, we may know the minimum and maximum NPV we may obtain given deviation that we set.
Here is tutorial video to help you learn about Monte Carlo Simulation :
http://www.youtube.com/watch?v=Q3rv3yF0bPA&feature=related
Monday, November 7, 2011
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