Engineering Economic Analysis

(Chris Devlin) #1
Simulation 329

FIGURE 10-10 Simulation spreadsheetfor Example 10-15 and 10-16.

RiskNonnal function, however spreadsheets with @Riskfunctionsdisplayby default the results
of using average values.
The RATEfunction contains two @Riskfunctions: RiskUnifonn and RiskNonnal. The uni-
fonn distribution has the minimum and maximum values as parameters.The nonnal distribution
has the average and standard deviation as parameters.
The third IRR (cell A13) is the average for 1000 iterations. It will change each time the
=simulationis done. =I'hegraph in Figure 10-10 withl 000'"iterations is much §mootIier""thanThe
graph from Example 10-15, where 25 iterations were done.


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A B I c D E F


(^1) -1500 averagefirst cost
2 150 standarddeviationof first cost
3 12 minimumvalue of life
4 16 maximumvalue of life
5 250 annualbenefit
(^6) I
(^7) IRR computedusing averages
8 14.01% =RATE((A3+A4)j2,A5,Al)
(^9) I
10 IRR for each simulation iteration
11 14.01% =RA TE(RiskUniform(A3,A4),A5,RiskNorma1(Al,A2))
(^12) I
13 14.15% =average value of All (IRR) from 1000 iterations
14 2.17% =standard deviation of All (IRR) from 1000 iterations
(^15) I
(^16) Distributionfor IRR (cellAll)
17 16 -


(^1814) -
(^1912) - -
20 --- -
1O -
(^21) a
22 8 -
23 .0^06 -
r- -------
(^244) - -
(^252)
l,n,n.nIr-1I






(^260) "n, -
(^277) 8.5 10 11.5 13 14.5 16 17.5 19 20.5 -
(^28) IRR(%)

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