Essays on Price Simulation Assignment

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The paper "Price Simulation" is a great example of a finance and accounting assignment. The excel random function was used to establish the fluctuating number of competitors who could enter at any time. The number of competitors commands the market share of AST and this was matched with the random number and then weighted over the 5 years. The growth of customers impacted the expected market share with a normal distribution With this in mind, a Risk analysis was carried out using the following steps. First, having identified the formula to determine the market share, a table for risk analysis was drawn as shown below                                       The profit cell was then clicked and added to the output of the @Risk tab. The simulation settings were then set to 1000 iterations for 1 simulation The tab for settings also allowed to set for monte Carlo simulation/random values as shown below The Sampling tab was then used b.

Simulation Histogram The simulation was then run and gave the Histogram as shown below. Figure 1: A graph showing a monte carlo simulation for estimation of possible profits depending on the entry of competitors. Discussion Measures of central Tendency Mean= 45, 299,893 Median= 42,919,740 From the @Risk simulated model, there is a dominant mode of a class of about 55,000,000 Measures of variability Max 102, 373,740 Min: 13, 675,500 Range: 102,373,740-13,675,500= 88698240 Stdev: 18140 155 The results show that profit is expected throughout with more reasonable profits of over 90% being recorded.

However, from the measures of dispersion, this data is widely spread. Qn two. Decision analysis 2.a The table showing the input values Table 1: A table of input values for the decision-making process event probability     Decision Payoff         not market < 0         Market   successful 60%     successful returns 5000000 failure 40%     failure returns -2600000 successful tested effective 80%         failure tested effective 20%     Test cost -225000 successful not tested effective 30%         failure not tested effective 70%         test effective 60%         Not tested effective 40%                      

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