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Capital Budgeting: Financial Appraisal of Investment Projects

Don Dayananda, Richard Irons, Steve Harrison, John Herbohn, Patrick Rowland

Chapter 9

Simulation concepts and methods - all with Video Answers

Educators


Chapter Questions

01:34

Problem 1

Explain the basic steps in risk analysis or Monte Carlo simulation.

Sanchit Jain
Sanchit Jain
Numerade Educator
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Problem 2

Suppose the number of customers at a proposed restaurant is expected to follow a triangular distribution with pessimistic, modal and optimistic levels of 40,60 and 100, respectively, on weeknights and 60,90 and 140 , respectively, on weekends. Using the random number generator on your computer spreadsheet, generate a sample of customer numbers for a two-week period.

Shu Naito
Shu Naito
Numerade Educator
01:12

Problem 3

Is risk analysis a complement or an alternative to sensitivity analysis? Discuss.

Lizabeth Tumminello
Lizabeth Tumminello
Numerade Educator
01:41

Problem 4

Consider the Delta Project example of Chapter 2. Suppose probability distributions have been estimated in terms of pessimistic, modal and optimistic values as in Table 8.2 of Chapter 8. Develop a simulation model to derive a cumulative relative frequency curve for this project.

Hoan Nguyen
Hoan Nguyen
Numerade Educator

Problem 5

Develop a simulation model in an area in which you are familiar, along similar lines to that of Example 9.2. Incorporate two or more decision variables in this model, and conduct a deterministic experiment to identify the optimal management policy. Explain how this model could be made into a stochastic simulation model.

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