FINS3625 Assignment 2


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FINS3625 Assignment 2

Date Due: 11pm 17 April, with electronic submission via the course website, under Assessments. (Total marks: 40)

This assignment is in two parts: Part A (worth 20 marks) and Part B (worth 20 marks). Part A will be released before Part B, though both are due together by the due date in a combined pdf file.
Part A
1. In this question please conduct a NPV US✩ Monte Carlo simulation of the Disney Theme Park investment project analysis from the week 4 tutorial. The simulations should be conducted with the country risk premium firstly held constant at 3% with 1,000 iterations which are graphically displayed in a histogram. Secondly, the analysis should be repeated with the country risk premium held constant at 4.5% with another 1,000 iterations which are graphically displayed in another histogram.

These analyses should allow the revenues as a percent of predictions and the operating expenses at parks as a percent of revenues to vary.

The revenues as a percent of predictions should follow a uniform dis tribution between 75% and 125%. The operating expenses at parks as a percent of revenues should follow a uniform distribution between 50% and 70%.

Interpret your findings for both cases of the country risk premium, including the mean, worst outcome, best outcome, and percentage of outcomes with a negative NPV.

In addition to the write-up of your analysis, you should also sepa rately submit your spreadsheet file that contains the calculations. [15 marks (8 marks for calculations, 4 marks for write-up, 3 marks for presentation) ]

2. In a 3 minute oral presentation (with presentation slides on a USB for display) in your week 8 tutorial, discuss the considerations given to choosing the probability distributions for investment project NPV

Monte Carlo simulations.

Better presentations typically have presentation slides that are not overcrowded with too much content and the presentation is at the right pace (in particular, not too fast). [5 marks (2.5 marks for content, 2.5 marks for organisation and clarity) ]

2026-04-02