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Discuss why simulation analysis can provide benefit

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1. Briefly explain how shifting the firm's capital structure weights might directly tie to the "goal of the firm."

2. Briefly discuss why simulation analysis (such as Monte Carlo simulation) can provide benefit within the capital budgeting process. What is the main potential limitation to its value?

3. A fellow analyst has run NPV analysis on a project and brought the results to you to discuss before showing it to the Board of Directors. The analyst shows you the Excel model and states "The project has an NPV of $84,625. A profit of only $84,625 on a million dollar investment seems really low so I'm going to recommend rejecting." What is wrong with the analyst's statement and what would you tell him or her?

Reference no: EM133112599

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