Question
Regarding Dahlia Simmons Ulrich CFO problem, please solve the following question using excel and explain to me the steps: Create a monte Carlo simulation for
Regarding Dahlia Simmons Ulrich CFO problem, please solve the following question using excel and explain to me the steps:
Create a monte Carlo simulation for the project with at least 500 runs . Calculate the IRR each run. Note that the IRR function will return an error if the IRR of the project is too low . For example , what is the IRR if both the initial cash flow and operating cash flows are negative? if the IRR is less than -100% . This is not a problem when you are calculating the IRR one time because you can see the IRR is too low but when you are running 500 or more iterations it can create a problem when you try to summarize the results. Because of this issue you should create an IF statement that tests whether the operating cash flow divided by the absolute value of the initial investment is less than 0.10. if this is the case the cell will return an IRR of -99.99% , if this is not the case the cell will calculate the IRR. (NB: It is part a in book corporate finance core principles and applications 4th edition Chapter 9 Problem 1EMP)
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