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Business Case Analysis with R: Simulation Tutorials to Support Complex Business Decisions by Robert D. Brown III

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© Robert D. Brown III 2018
Robert D. Brown IIIBusiness Case Analysis with Rhttps://doi.org/10.1007/978-1-4842-3495-2_3

3. Include Uncertainty in the Financial Analysis

Robert D. Brown III
(1)
Cumming, Georgia, USA
 
We incorporate potential effects of uncertainty in our analysis to account for the fact that we don’t know what will happen in the future. Monte Carlo simulation is the method that allows us to include these considerations of uncertainty analytically.

Why and How Do We Represent Uncertainty?

Looking forward to future outcomes that are important to consider in planning exercises , we realize rather quickly that we rarely know the exact representative values of those outcomes. We don’t know exactly how much something will cost, or how long ...

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