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.

Question

Quizplus · Accepted Answer

Monte Carlo simulation uses the probability distributions of variables as inputs to estimate the project's net present value (NPV).

Monte Carlo Simulation