Implementation of Methods of Simulation Modeling of Investment Project Risks by Means of MS Excel
Journal Title: Бізнес Інформ - Year 2014, Vol 9, Issue 0
Abstract
Investment project development regards an investment project as an object of a financial operation associated with time-phased financial receipts and spendings, that is cash flows, or as a system of organizational and legal as well as settlement and financial documents necessary for carrying out certain activities or those which describe such activities. This work considers a business problem which serves as the basis for development of a simulation procedure. Considering that the original variables included into the problem as well as the results are arbitrary, it is necessary to know the law of distribution of the variables (uniform or normal) before simulation modeling. If the law of distribution of random variables included into the problem is unknown, it is necessary to conduct computational experiments both for the uniform and the normal distribution and compare them afterwards. Based on the comparison, preference is given to the option which yields the largest money receipts with the minimal net present value of the investment project. In the view of the foregoing, the templates ("Simulation", "Analysis Results") designed for simulation modeling for the uniform and normal laws of distribution of the key variables of the problem as well as the results (NCF, NPV) were developed in the work. Numerical characteristics were obtained for the key variables and the results, and their probabilistic analysis was carried out. In addition, a graphical comparative analysis of NCF, NPV was conducted for different distributions. A conclusion was made on the basis of the comparative analysis that if a large number of experiments are held, the best option is to select the normal law of distribution of key variables and results.
Authors and Affiliations
Yevhen Hlotov, Volodymyr Cherevatenko
Keywords
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