This problem asks you to construct a simple simulation model. If you do not own simulation software, see the directions for downloading simulation software under Additional Resources.

a. Problem 9 earlier asked you to extend the forecast for R&E Supplies contained in Table 3.5 through 2023. Using the same spreadsheet, simulate R&E Supplies’ external funding requirements in 2023 under the following assumptions.

i. Represent the growth rate in net sales as a triangular distribution with a mean of 30 percent and a range of 25 to 35 percent.

ii. Represent the interest rate as a uniform distribution varying from 9 percent to 11 percent.

iii. Represent the tax rate as a lognormal distribution with a mean of 25 percent and a standard deviation of 2 percent.

b. If the treasurer wants to be 95 percent certain of raising enough money in 2023, how much should he raise? (Click the arrow on the right margin of your density function and select the Percentile Table.)

 LO.1