Futura Apartments

Author
Crystal Ball

Summary
You are a potential purchaser of the Futura Apartments complex. You have researched the situation and
created a model worksheet to help you make a knowledgeable decision. Because there is some uncertainty
surrounding the number of units you can rent each month and the monthly expenses, you need Crystal Ball
to simulate your potential profit or loss per month. This knowledge will help you to determine whether or not
this complex is worth purchasing.

Note: This example is presented as the first tutorial in the "Getting Started with Crystal Ball" chapter in the
Crystal Ball Getting Started Guide. The tutorial provides far more detail than this description.

Keywords: assumption, forecast, forecast chart, sensitivity chart, tutorial, investment

Discussion
Your research has led you to make the following assumptions:

-$500 per month is the going rent for the area.

- The number of units rented during any given month will be somewhere between 30 and 40.
- Operating costs will average around $15,000 per month for the entire complex, but might vary slightly from
month to month.

Based on these assumptions, you want to know how profitable the complex will be for various combinations
of rented units and operating costs. This would be difficult to determine using a spreadsheet alone. As useful
as spreadsheets are, you cannot reduce the last two assumptions to single values as required by the
spreadsheet format. If you tried all the combinations, you would need to spend a great deal of time working
through what-if scenarios, entering single values and recording the results. Even then, you would likely be
left with a mountain of data instead of the overall profit and loss picture. With Crystal Ball, this kind of
analysis is easy.
Using Crystal Ball

Crystal Ball enhances your Excel model by letting you create probability distributions that describe the
uncertainty surrounding specific input variables. This model includes two probability distributions, the Number
of Rental Units and the Monthly Expenses, which are referred to in Crystal Ball as "assumptions." Each
assumption cell is colored green and is marked by an Excel note (mouse over the cell to view the note). To
view the details of an assumption, highlight the cell and either select Define Assumption from the Define
menu or click on the Define Assumption button on the Crystal Ball toolbar.

This model also includes a Crystal Ball forecast, the Profit or Loss for the month, shown in light blue.
Forecasts are equations, or outputs, that you want to analyze after a simulation. During a simulation, Crystal
Ball saves the values in the forecast cells and displays them in a forecast chart, which is a histogram of the
simulated values. To view the forecast with Crystal Ball, highlight the cell and either select Define Forecast
from the Define menu or click on the Define Forecast button on the toolbar.
When you run a simulation, Crystal Ball generates a random number for each assumption (based on how the
assumption has been defined) and places that new value in the cell. Excel then recalculates the model. You
can test this by selecting Single Step from the Run menu or clicking on the Single Step button on the toolbar.

After you run a simulation, you will see the Profit or Loss forecast chart. You can view the statistics or
percentile values of the run, or you can enter values into the input fields on the frequency chart view. What is
the chance that you will make at least $2500 per month? What is the chance you will lose money? (Hint:
enter a number into the lower left field and use the Enter button on your keyboard to accept the value.)
Would you feel comfortable making an investment into Futura Apartments?

To view which of the two assumptions had the greatest impact on the forecast, use a sensitivity chart. Which
variable causes the most variation in the target forecast? Can you somehow reduce this source of
uncertainty and improve your overall forecast? Change the assumption parameters or the assumption types,
run a new simulation (hint: don't forget to hit the reset button before beginning a new simulation!), and
compare the results. You can also generate a report by selecting Create Report from the Analyze menu or
clicking on the Create Report button on the toolbar.

Copyright Information
Copyright © 2004, 2010, Oracle and/or its affiliates. All rights reserved.

Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names
may be trademarks of their respective owners.
 385068753.xls

Futura Apartments

Number of Rental Units 35 First Assumption

Rent per Unit $500.00
Monthly Expenses $15,000.00

Profit or Loss $2,500.00 Second Assumption

Forecast Cell

tenemos que dominar suposiciones y previsiones .

para las suposiciones definir las distribuciones estadisticas .

la variable 1 y la variable 2 .

variable precio
mi resultado previsible sera
variable cantidad el ingreso

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 385068753.xls

si es verde es una supocision

Assumption que todas las opciones tienen la misma probabilidad .por es es discreta uniforme .

15000 el promedio hacia abj oes 14000 y el mayor es 15000 …

Assumption

previsión

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 385068753.xls

es es discreta uniforme .

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