Monte Carlo Simulation

question 13

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.

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