Skal der spekuleres eller risikoafdækkes?

Sammy Reda

Student thesis: Diploma thesis


The purpose of this thesis is to shed light on the difference between a deterministicand a stochastic DCF model. The latter to create more transparency and result in a more accurate estimate of the present value. In order to understand the difference between these two methods, it is necessary to do a mathematical review of the data and scrutinize the information available to understand and imagine how this can be a determining factor for enterprise value. When using the deterministic approach, valuable information is easily overlooked, as its primary focus is on the free cash flow. The deterministic methods neglect the uncertainty of parameters, which can provide crucial insight. By utilizing the Monte Carlo simulation, formidable information can be acquired. Monte Carlo is an unprecedented probability-based model; it is revered for its capability of incorporating uncertainty into the analysis - to provide a logical, efficient alternative while flagrantly revealing the shortcomings of the current model. Further, it provides the possibility that several variables can be simultaneously evaluated. There will be a case study about Blue Waters Shipping to illustrate the approach and highlight the benefits and obstacles that comes with using the Monte Carlo simulation.

EducationsGraduate Diploma in Finance, (Diploma Programme) Final Thesis
Publication date2019
Number of pages85