contemporary engineering economics, 4 th edition, © 2007 risk simulation lecture no. 49 chapter 12...
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![Page 1: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/1.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
Risk Simulation
Lecture No. 49Chapter 12Contemporary Engineering EconomicsCopyright, © 2006
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Contemporary Engineering
Economics, 4th edition, © 2007
Logical Steps Involved in Simulating a Risky Investment
![Page 3: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/3.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
A Logical Sequence of a Monte Carlo Simulation to Obtain an NPW Distribution
![Page 4: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/4.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
A Sampling Scheme for Discrete and Continuous Random Variables
![Page 5: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/5.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
Observed NPW Values ($)
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Contemporary Engineering
Economics, 4th edition, © 2007
Simulated NPW Frequency DistributionMean = $44,245, Standard Deviation = $18,585
![Page 7: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/7.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
Simulation Result Based on 200 Iterations
![Page 8: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/8.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
Risk Simulation with @RISK Create a Cash Flow Statement with Excel Define Uncertainty Pick Your Bottom Line Simulate Analyzing the Simulation Result Screen
![Page 9: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/9.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
Step 1: Create a Cash Flow Statement with Excel
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Contemporary Engineering
Economics, 4th edition, © 2007
Step 2: Define Uncertainty
![Page 11: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/11.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
Step 3: Pick Your Bottom Line – NPW at Cell G13
G13 Output cell
Add Output
![Page 12: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/12.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
Step 4: Simulate
Start Simulation
Simulation Setting
Start @RISK
![Page 13: Contemporary Engineering Economics, 4 th edition, © 2007 Risk Simulation Lecture No. 49 Chapter 12 Contemporary Engineering Economics Copyright, © 2006](https://reader036.vdocument.in/reader036/viewer/2022081504/56649d4e5503460f94a2d548/html5/thumbnails/13.jpg)
Contemporary Engineering
Economics, 4th edition, © 2007
Step 5: Analyzing the Simulation Result Screen