Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › Anyone can explain simulation for uncertainty in more simplely way?
- This topic has 2 replies, 3 voices, and was last updated 14 years ago by  dalitso999. dalitso999.
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- March 16, 2011 at 2:48 pm #47711Read the text book of BPP, still have no idea about this method. 
 🙁Thanks in adv! March 18, 2011 at 8:04 am #79706Anonymous Inactive- Topics: 0
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 I read Kaplan . Sensitity analysis considered the effects of changing one variable at time while the sitimulation( Monte Carlo Sitimulation) improves this by looking at many changing variables at one time. it produces a distribution of possible outcomes from the project then the probality of different outcomes is then calculated. These is done in 3 stages: 
 1- Specify the major variable e.g market details where the market size, selling price , market growth rate will be looked into
 2- Specify the relationship between the variables to calculate NPV
 3-Simulate the Environment- This now forming the distribution for each variable – the select the value of each variable corresponding with the selected random nmber and compute the NPV- This process ir repeated so many times to create a probability of distribution returnsthe result of a simulation exercise will be a probability of NPVs i think this will help you May 8, 2011 at 5:02 pm #79707Nathyokani ? are you in Malawi ? 
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