--%>
Assignment Help - homework help

Mascot Simulation

Simulation with Crystal Ball


Provided Workbook: Mascot Simulation
Relevant Readings:"Discounted Cash Flow Modeling" folder + Textbook Chapter 4.
This is an individual assignment.

 


Mascot Industries (B)


Consider Mascot's investment decision modeled in HW2.
Mascot now realizes that some of the assumptions made are not quite correct.

For example, the projected receivables for both machines are rather unreliable. It is likely that such projections will diverge significantly from their originally estimated 4-year mean. A normal distribution around the mean, with twice the originally predicted 4-year standard deviation, sounds reasonable to reflect such uncertainty.

Also, the purchase price of the new machine is not guaranteed. Most likely, Mascot will pay the originally estimated amount but it is possible that the price be as low as $240,000 or as high as $270,000. Mascot agrees that the uncertain purchase price should follow a triangular distribution.

Mascot's CFO wants to evaluate how these uncertain variables might affect the project's net present value.


Using Crystal Ball, run a simulation in Workbook "Mascot Simulation B" and provide answers to the following questions. Make sure that you copy the full report of your simulation in a separate worksheet.
You will also be asked to load your spreadsheet at the end of this assignment.

Questions.
Using the distributions described above, set up a simulation in the "Crystal Ball Model B" worksheet.
Run 10,000 trials and attach the full report in a worksheet called "simulation B".

In the "Interpretation" worksheet, provide answers to the following questions:

1) Based on simulation results, are you 100% confident that Mascot should acquire the new machine? Explain.
2) How much effort should Mascot allocate at securing the lowest possible purchase price for the new machine? Explain using the simulation results.

   Related Questions in Finance Basics

  • Q : Describe Schedule 10R Schedule 10R

    Schedule 10R (Supplementary Schedule of Revenues and Transfers): The Department of Finance control document replicating information for transfers, revenues, and inter-fund loans for the past, present, and budget years. Schedule 10Rs i

    		•
  • Q : Revision Order #2 Hello, You folks

    Hello, You folks recently completed an order for me. I'm very impressed and much thanks in advance. I'd like to submit more problems (8 attached) if you can have the same expert work on these please? Some of the #'s were slightly modified from my previous order, so should be easier than starting

    		•
  • Q : Describe Form 22 Form 22 : It’s a

    Form 22: It’s a department’s request to transfer money to the Architectural Revolving Fund (example, for building enhancements), reviewed by the Department of Finance.

    		•
  • Q : Risk from perspective of the Capital

    Discuss risk through the perspective of the Capital Asset Pricing Model (CAPM).The Capital Asset Pricing Model, or CAPM, can be utilized to compute the appropriate required rate of return for an investment project specified its degree of risk as

    		•
  • Q : Price Earning ratio Define the term

    Define the term Price Earning ratio and how it is calculated?

    		•
  • Q : Explain Statewide Cost Allocation Plan

    Statewide Cost Allocation Plan (SWCAP): It is the amount of state administrative, General Fund costs (example, amounts expended by the central service departments like the State Personnel Board, State Treasurer’s Office, State C

    		•
  • Q : Define Legislature Legislature,

    Legislature, California: Two-house bodies of elected representatives vested with the accountability and power to make laws affecting the state (that is, except as limited by the veto power of the Governor).

    		•
  • Q : What are the Changes in Authorized

    Changes in Authorized Positions (“Schedule 2”): This is a schedule in the Governor’s Budget which reflects staffing changes made following to the adoption of the present year budget and enacted legislation. This planned document modi

    		•
  • Q : What is Finance Letter Finance Letter

    Finance Letter (FL): The proposals made, by the Director of Finance to the chairpersons of the budget committees in each and every house, to amend the Budget Bill and the Governor's Budget from that presented on January 10 to reflect a revised plan of

    		•
  • Q : Define Planning Estimate Line Planning

    Planning Estimate Line: The separate planning estimate adjustment or entry for a specific expenditure or type.

    		•