Monte Carlo Simulation

Multiple Choice

Monte Carlo simulation:

A) can be used to estimate a project's market risk, but cannot be used to determine its net present value (NPV) .
B) uses the probability distributions of variables as inputs to estimate the project's net present value (NPV) .
C) produces an expected net present value (NPV) , an internal rate of return (IRR) , and a measure of the project's risk for different scenarios.
D) gives an exact outcome for a capital budgeting analysis.
E) calculates net present value (NPV) for a change in one key variable.