pranavtumkur/Profitability-Analysis-using-Monte-Carlo-simulation

Using VBA Macros, we will determine if setting up a business would be profitable 15 years down the line, subject to 9 inputs, each associated with a certain uncertainty (pun intended!) using Monte Carlo simulation.

Profitability-Analysis-using-Monte-Carlo-simulation

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In this project, we determine if setting up a business would be profitable 15 years down the line, subject to 9 inputs, each associated with a fixed uncertainty. Following are the inputs which we consider and their specifications-

To calculate the Cash Flow (CF) for a particular year, we will use the formula-

CF= (1-t)(S-C) + D - C_TDC - C_WC - C_land - C_startup - C_royalty + V_salvage (+ C_WC)

Using Monte Carlo simulation, we iterate through a fixed number of scenarios, to determine what percent of scenarios result in a positive NPV (Net Present Value)-

The user can also change the parameters using the userform displayed after clicking on 'Run Simulation' on the excel sheet-

We then plot a histogram to get a 1-stop view of the distribution of the NPV as a consolidation of all the scenarios-