Chapter 79

Introduction to Monte Carlo simulation

Questions answered in this chapter:

  • What happens when I type =RAND() in a cell?

  • How can I simulate values of a discrete random variable?

  • How can I simulate values of a normal random variable?

  • How can a greeting-card company determine how many cards to produce?

  • Into what interval will I be 95 percent sure that the true mean profit will fall?

  • How does the new Office 365 RANDARRAY function work?

  • How can I generate a random sample from a list of names?

Data analysts frequently want to accurately estimate the probabilities of uncertain events. For example, what is the probability that a new product’s cash flows will have a positive net present value (NPV)? What is the risk factor of an investment ...

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