Abstract
Using Monte Carlo simulation in the classroom allows students to better model risk inherent in forecasted models. Understanding the usefulness and limitations of Monte Carlo simulation provides students a framework in which to model a variety of uncertainties in the assumptions and the interrelationships between the assumptions placed in the model. This paper first describes how spreadsheet analysis traditionally has been used to quantify risk. Next the use of Crystal Ball ® software to conduct Monte Carlo simulation is described along with a brief introduction of some of the capabilities and features of the software.
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