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Create a Monte Carlo simulation to forecast Company ABCs net profit based on the assumptions...

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Accounting

Create a Monte Carlo simulation to forecast Company ABCs net profit based on the assumptions below. Then answer the following 2 questions.

  • The mean of sales is 5,000
  • The standard deviation of sales is 200
  • Cost of goods sold is 45% of sales
  • Other cost is 1,500
  • Tax rate is 25%

Step 1: Simulate 10,000 sales samples using a normal distribution. Set up Numpy random seed to 150 to make sure you get the same results. Step 2: Forecast net profit using this formula: Net profit = (Sales COGS Other Cost) x (1 Tax Rate) What is the net profit in the worst case of the simulations?

a) 626.35

b) 596.21

c) 608.97

d) 572.68

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