Thank you. I suggest that the more significant benefit would arise from simulating the interaction of several distributions rather than simulating a single distribution, which inherently gravitates towards the mean by definition.
🎯 Key Takeaways for quick navigation: 00:00 🤖 *Introduction to Monte Carlo Simulation in Excel for Capital Budgeting* - Understanding Monte Carlo Simulation for handling uncertainty in capital budgeting. 01:09 📈 *Normal Distribution and Cash Flow Variability* - Explaining the properties of a normal distribution and how cash flows can vary. 03:12 📊 *Traditional NPV and IRR Calculation* - Demonstrating the standard NPV and IRR calculation methods for capital budgeting. 05:36 🎲 *Setting Up Monte Carlo Simulation* - Using the NORM.INV function and random probabilities to simulate variable cash flows. 07:00 📉 *Monte Carlo NPV Calculation* - Calculating NPV using the Monte Carlo simulation approach. 08:18 📈 *Monte Carlo IRR Calculation* - Calculating IRR using the Monte Carlo simulation approach. 09:46 🔄 *Replicating Monte Carlo Simulations* - Setting up multiple replications of the Monte Carlo simulation. 11:11 📈 *Analyzing Simulation Results* - Calculating mean, median, maximum, and minimum values to assess project risk. 14:35 🔄 *Changing Standard Deviation* - Illustrating the impact of changing the standard deviation on simulation results. Made with HARPA AI
Thank you. I suggest that the more significant benefit would arise from simulating the interaction of several distributions rather than simulating a single distribution, which inherently gravitates towards the mean by definition.
Thank you for taking the time to explain this Dr. Moy
🎯 Key Takeaways for quick navigation:
00:00 🤖 *Introduction to Monte Carlo Simulation in Excel for Capital Budgeting*
- Understanding Monte Carlo Simulation for handling uncertainty in capital budgeting.
01:09 📈 *Normal Distribution and Cash Flow Variability*
- Explaining the properties of a normal distribution and how cash flows can vary.
03:12 📊 *Traditional NPV and IRR Calculation*
- Demonstrating the standard NPV and IRR calculation methods for capital budgeting.
05:36 🎲 *Setting Up Monte Carlo Simulation*
- Using the NORM.INV function and random probabilities to simulate variable cash flows.
07:00 📉 *Monte Carlo NPV Calculation*
- Calculating NPV using the Monte Carlo simulation approach.
08:18 📈 *Monte Carlo IRR Calculation*
- Calculating IRR using the Monte Carlo simulation approach.
09:46 🔄 *Replicating Monte Carlo Simulations*
- Setting up multiple replications of the Monte Carlo simulation.
11:11 📈 *Analyzing Simulation Results*
- Calculating mean, median, maximum, and minimum values to assess project risk.
14:35 🔄 *Changing Standard Deviation*
- Illustrating the impact of changing the standard deviation on simulation results.
Made with HARPA AI
This was really good..great job Dr. Ronald Moy. I enjoyed this.
I see that you add c5 to the npv but it should be c4, as that is the project cost instead of the yearly cashflow.
very informative thank you！
kak cara hitung expected returnnya gmn?
thank you
Hi thanks for the video. I am just curious how do you determine the standard deviation for the assumptions?
If you have some historical data, you can estimate the standard deviation and use that.