Budget model simulation Required:

1. Review the budget model in Exercise 5.5 and its accompanying Excel file.

2. Randomise the variables chosen for scenario analysis with reasonable descriptions of the variables’ probability distributions. Clearly label and describe your randomised variables.

3. Simulate AbbaDabba’s leverage ratio computed by the budget model using Monte Carlo analysis.

4. Interpret the evidence in histogram and cumulative probability charts as the probability that AbbaDabba will violate its debt covenant.