Monte Carlo simulation involves the following steps:
A)Step 1: Modeling the project and Step 2: Specifying probabilities.
B)Step 1: Modeling the project, Step 2: Specifying probabilities, and Step 3: Simulating cash flows.
C)Step 2: Specifying probabilities, Step 3: Simulating cash flows, and Step 4: Calculating present value.
D)Step 1: Modeling the project, Step 2: Specifying probabilities, Step 3: Simulating cash flows, and Step 4: Calculating present value.

Question

Quizplus · Accepted Answer

Monte Carlo simulation involves modeling the project, specifying probabilities, simulating cash flows, and calculating present value. Therefore, the correct choice is D as it includes all the necessary steps.

Monte Carlo Simulation Involves the Following Steps