Monte Carlo simulation involves the following steps:
I. Step 1: Modeling the project
II. Step 2: Specifying probabilities
III. Step 3: Simulate the cash flows
IV. Step 4: Calculate present value
A) I and II only
B) I, II, and III only
C) II, III, and IV only
D) I, II, III, and IV

Question

Quizplus · Accepted Answer

Monte Carlo simulation involves all the steps listed: modeling the project, specifying probabilities, simulating the cash flows, and calculating present value.

Monte Carlo Simulation Involves the Following Steps