hich of the following is not true regarding the use of simulation in multinational capital budgeting? a. It can be used to generate a probability distribution of NPVs. b. It can only be used for one variable at a time. c. It generates a probability distribution of NPVs by randomly drawing values for the input variable (s). d. It can be used to develop probability distributions of all variables with uncertain future values.

Question

Mathematics

Aaron Henderson

21 March, 12:20

hich of the following is not true regarding the use of simulation in multinational capital budgeting? a. It can be used to generate a probability distribution of NPVs. b. It can only be used for one variable at a time. c. It generates a probability distribution of NPVs by randomly drawing values for the input variable (s). d. It can be used to develop probability distributions of all variables with uncertain future values.

+4

Answers (1)

Know the Answer?

Yoselin Burton · Answer 1

B. It can only be used for one variable at a time

Step-by-step explanation:

Simulation can accommodate multiple variables at a time. The variables could be constraints such as time, amount, quantity, duration. A range of expected values must either be developed or provided for the variables before simulation models can then be applied to these ranges to generate a distribution of NPVs.