--%>
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 : Influence of mergers on fees assessed

    What influence have mergers had on fees assessed for retail bank services? The effect is not clear. Market conditions and the level of competition often determine the cost for retail bank services.

    		•
  • Q : Four major phases of the business cycle

    Normal 0 false false

    		•
  • Q : Define Sponsor Sponsor : It is an

    Sponsor: It is an individual, group, or organization which initiates or brings to a Legislator's attention a proposed law modification.

    		•
  • Q : Define Current Year Current Year (CY):

    Current Year (CY): It is a term utilized in budgeting and accounting to designate the operations of the current fiscal year in contrast to past or future periods.

    		•
  • Q : Make mutual and stockholder-owned

    Compare and make mutual and stockholder-owned savings and associations of loan. Some savings and loan associations are owned through stockholders, just as commercial banks and other corporations are owned through their stockholders.  Other

    		•
  • Q : Primary requirement for JIT inventory

    Describe the primary requirements for a successful JIT inventory control system? For a JIT system to be successful the supplier has to be willing and capable to deliver materials immediately and the quality of delivered materials has to be high.

    		•
  • Q : Fin 235 Personal Finance Homework Fin

    Fin 235 Personal Finance Homework Chapter 8: Problems: 1, 3, 5, 7 1.   Most home insurance policies cover jewelry for $1,000 and silverware for $2,500 unless items are covered with additional insurance. If a family

    		•
  • Q : Define Financial Controls Financial

    Financial Controls: Any measure of how fine a company or department controls its costs, at times stated as how far beneath or over budget it is. Financial controls are a critical portion of any financial system. They make sure that the resources are b

    		•
  • Q : Chartered bank loan policy Normal 0

    Normal 0 false false

  • Q : Value $100 is received at the beginning

    $100 is received at the beginning of year 1, $200 is received at the beginning of year 2, and $300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, their combined future value at the end of year 3 is

    		•