Please help me solve using Monte Carlo Simulation

* Office Update To keep up-to-date with security updates, fixes, and improvements, choose Check for Updates. H15 X fx A B D E F G H 1 J 1 2 3 NPV POSITIVE TELLS US LITTLE ABOUT THE NESTLE PROJECT'S UNCERTAINITY. 4 THE PROJECT'S SALES, OPERATING COSTS, AND TERMINAL CASH FLOWS ARE UNCERTAIN ENHANCEMENT: WE CAN USE THEIR EXPECTED VALUES IN CALCULATING NPV USING MONTE CARLO 5 6 MONTE CARLO SIMULATION ALLOWS US TO DIG DEEPER INTO THE UNCERTAINTY UNDERLYING OUR ASSUMPTIONS. 7 FUTURE SALES: MODEL WITH A NORMAL DISTRIBUTION: EXPECTATION = $15,000 WITH STDEV = 1000, 2000, 3000, 4000, 5000 FOR YEARS 1-5 00 THIS RECOGNIZES THAT FUTURE SALES BECOME MORE UNCERTAIN AS TIME FROM TODAY INCREASES. 9 FUTURE OPERATING EXPENSES: WE HAVE NO REASON FOR A CENTRAL TENDENACY. 10 THUS WE USE A UNIFORM DISTRIBUTION: EXPECTATION = 75% OF SALES, WITH A MINIMUM= 70% AND A MAXIMUM = 80% EVALUATE THIS PROJECT OPPORTUNITY: PROJECT ACCEPTABLE: NPV >O? IRR > COST OF CAPITAL ? 11 12 13 ANSWER: 14 SPREADSHEET: DETERMINATION OF COSTS AND ANNUAL CASH FLOWS; AFTER TAX NPV AND IRR 15 16 17 18 19 20