What is the purpose of using simulation analysis Simulation is one way of dealing with the uncertainty involved in forecasting the outcomes of capital budgeting projects or other types of decisions. A Monte Carlo simulation model uses random variables for inputs. By programming the computer to randomly select inputs from probability distributions, the outcomes generated by a simulation are distributed about a mean and instead of generating one return or net present value, a range of outcomes with standard deviations are provided S-479 CopyrightC2005 by The McGramw-Hill Companies, IncCopyright © 2005 by The McGraw-Hill Companies, Inc. S-479 13-9. What is the purpose of using simulation analysis? Simulation is one way of dealing with the uncertainty involved in forecasting the outcomes of capital budgeting projects or other types of decisions. A Monte Carlo simulation model uses random variables for inputs. By programming the computer to randomly select inputs from probability distributions, the outcomes generated by a simulation are distributed about a mean and instead of generating one return or net present value, a range of outcomes with standard deviations are provided