- This topic has 2 replies, 3 voices, and was last updated 15 years ago by .
Viewing 3 posts - 1 through 3 (of 3 total)
Viewing 3 posts - 1 through 3 (of 3 total)
- You must be logged in to reply to this topic.
Interactive BPP books for September 2026 exams, recommended by OpenTuition.
Get discount code >>
Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › Anyone can explain simulation for uncertainty in more simplely way?
Read the text book of BPP, still have no idea about this method.
🙁
Thanks in adv!
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 returns
the result of a simulation exercise will be a probability of NPVs
i think this will help you
Nathyokani ? are you in Malawi ?
