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
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Thank you for taking the time to explain this Dr. Moy
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.
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.
kak cara hitung expected returnnya gmn?
🎯 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
very informative 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.
thank you