Monte Carlo Simulation

Multiple Choice

Monte Carlo simulation

A) Can be useful for estimating a project's stand-alone risk.
B) Is capable of using probability distributions for variables as input data instead of a single numerical estimate for each variable.
C) Produces both an expected NPV (or IRR) and a measure of the riskiness of the NPV or IRR.
D) All of the above.
E) Only answers a and b are correct.