Excel Case: Expect the unexpected

•The colour coding that you should use is
limited to the following:
•The
only inputs that need to be noted are those that can be changed to examine
scenarios.
•The
output that should be noted are investment returns
•Calculate the Base Case (deterministic)
returns
•Build the Monte Carlo model with the
assumptions as random variables.
•Build the Monte Carlo model with the
assumptions as random variables
•Limit
your choice of distributions to Normal, Lognormal, Uniform, Triangular or
histogram (empirical)
•Justify
your choice of distribution and parameters.

Answer question:
•For each random variable, justify your
choice of distribution and parameters.
•How does the deterministic model compare
to the Monte Carlo model?
•Does
the MC model provide any critical insights for Delta?
•Which
estimates are critical to Delta?
•What
can Delta learn from this comparison?
•Since Delta is a US based company, they
will be concerned with the USD returns for this venture. How should this be
incorporated into the model?

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