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Monte Carlo simulation: Can be used to estimate a project's market risk, but cannot be used to determine its net present value (NPV). Uses the

Monte Carlo simulation:

Can be used to estimate a project's market risk, but cannot be used to determine its net present value (NPV).

Uses the probability distributions of variables as inputs to estimate the project's net present value (NPV).

Produces an expected net present value (NPV), an internal rate of return (IRR), and a measure of the projects risk for different scenarios.

Calculates net present value (NPV) for a change in one key variable.

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