Decision making tool for investment projects involving variable parameters

Economics.emfAn important topic in the decision making process is how to proceed when scenarios involve random parameters. For instance, sometimes it will be the cost of capital for your project that is not fixed like in some countries or perhaps the benefits for the project are exposed to currency exchange rates.

T15-1So what’s the effect of these variables on your project’s rate of return? Shall you take your decision based on a single scenario? What is the optimum combination of factors to get the best return on your investment? Furthermore, the project should be analyzed in a 5, 10 or 30 years period? How could you define what is the best case scenario? In Monte Carlo Consulting we have experienced these types of decisions with great returns and unfortunately we have watched some companies being very cautious about the project due to the lack of analysis skills and tools delaying too much the decision and lost the moment. In summary, you can put at risk your capital due to blindness about the best moment to deploy resources. To tackle these scenarios you must have all correlations regarding your project costs & benefits and also proper statistical analysis for random variables.

Plan de PrestamoIn Monte Carlo Consulting we do have the analysis skills and tools to assemble a proper project analysis for decision making process based on random and fixed variables simulation systems. These analyses are formally called Monte Carlo Analysis. For such purposes we use statistical know-how and simulation software to enable the scenarios simulation besides our experience on different case scenarios. Our main purpose here is to define the risk exposure for your capital by analyzing all possible scenarios & combinations to ensure you a greater ROI/NPV on your initiative.

We remain at your orders in Monte Carlo Consulting via twitter @MonteCarloCG and are pleased to help you. We thank your comments, share and like for this article.

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