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MC simulation in future CF forecasting
Hello,Can someone please explain me how to us MC in order to forecast future cash flow?Lets say that I should pay 100 this month, 200-in the next one, 300 after that... and so onHow can i use MC simulation in order to forecast what will be the next payment?Thanks
MC simulation in future CF forecasting
just did it for you the next month is 400....
MC simulation in future CF forecasting
no but really couldn't you just simulate the underlying that will give you the potential cash flows. the value at the end is your cash flow...?
MC simulation in future CF forecasting
srioae, I think you're rushing to a conclusion. The next cash flows could be 500, 800, 1300...boon22, you've underspecified this problem. If you could write a function that says "if the world has state X, then my cashflow at T is Y", then you're practically done.
MC simulation in future CF forecasting
Monte Carlo dosen't work that way. In Monte Carlo symulation you simulate a certain number os scenarios for the same periode, lets say 1000 scenarios for period 1. If you want to symylate also CF for periode 2 you have a different problem. In that case you have dynamic Monte Carlo symulation witch means that you have to symulate paths and not only scenarios.