What is simulation analysis of investment appraisal?

Simulation analysis of investment appraisal is a technique used to assess the financial viability of potential investment projects. It involves the creation of computer models that replicate the cash flows and financial outcomes of a project under different scenarios, taking into account various factors such as market conditions, economic variables, and project uncertainties. By running multiple simulations, the technique allows decision-makers to understand the range of possible outcomes and their associated probabilities, providing a more robust assessment of the project's risk and potential return. This analysis assists in making informed investment decisions by highlighting potential risks, identifying areas for improvement, and estimating the project's financial performance.

This mind map was published on 18 November 2023 and has been viewed 56 times.