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1. While using Monte Carlo simulation in capital budgeting, if a variable such as the unit...

1. While using Monte Carlo simulation in capital budgeting, if a variable such as the unit cost of production is relatively certain, one would use a random distribution to simulate its values.

True or False?

2. While using Monte Carlo simulation in capital budgeting in the year 2018 circa, if one were to use a personal computer, the following number of random drawings/calculations would probably be appropriate:
a. Tens
b. Thousands
c. Billions
d. Trillions

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Answer #1

1, It is used to simulate uncertain variables of the model. Since unit cost of production is certain the answer would be false.

2. B. Thousands as per the computation capability of computer

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