c$)$ Approaches to Project Analysis

In class we subjected the base NPV of a certain project to Scenario Analysis and Simulation analysis among others. The base NPV was estimated using the forecast of four variables, namely, quantities, price, variable cost and fixed cost. Note that the beta for estimating the project cost of capital was also estimated.

Questions:

i$.$ Explain carefully how you will undertake Scenario Analysis involving all estimated variables.

ii$.$ Do the same for Simulation Analysis of the same project

Note. No calculations are required.