Translate operating and WACC uncertainty into Equity Value

Reconcile the deterministic DCF first

The synthetic 2027–2031 forecast sells 100 / 110 / 120 / 130 / 140 units at EUR 10. Unit COGS are EUR 5, annual fixed opex EUR 300, D&A and capex EUR 20 each, tax 25% and operating NWC zero. Opening PP&E is EUR 100 to support depreciation. All monetary results here are EUR, not thousands.

Valuation date is 2026-12-31, year-end discounting, WACC 10% and perpetual growth 2%. Native period-end boundaries give discount times 1.002739726 through 5.002739726 years; these are not silently replaced by integer years. The terminal FCFF is EUR 290.70.

Specify six independent sources

Each of the five annual price sources is explicitly entered and sampled Uniform(9,11) EUR per unit. WACC is Triangular(min 8%, most likely 10%, max 12%). Volume, costs, tax, NWC, capex, growth and the EUR 80 net-debt bridge remain fixed. One price edit is not assumed to move every forecast year.

These six draws are independent. That is a material modeling choice: five independent annual prices are not a persistent price shock or a correlated business cycle. The current product does not infer a correlation matrix or fit distributions to market observations.

1. Import the example and select Value → DCF, Base, Equity Value.
2. Open Analyze → Stochastic. Check all five year-specific prices and the WACC override.
3. Use Monte Carlo, seed 42 and 5,000 runs; keep the supplied distributions and target threshold.
4. Read valid runs and the target units before comparing quantiles or threshold frequency.

Read the result against the stated threshold

All 5000 runs were valid; 0 were invalid. The measured frequency below Base Equity Value is 51.18%. P10, P50 and P90 are cumulative sample quantiles: P10 is the lower tail here, not a 10% exceedance value.

The Base uses central inputs; it need not equal the simulated mean or median. WACC appears in a nonlinear denominator and the last forecast price also affects terminal FCFF. That terminal dependence is a reason to scrutinize the long-run assumptions, not to present the simulation as extra valuation evidence.

Validity and reproducibility are separate from realism

The selected WACC range stays above 2% growth, and all modeled outputs were available. This does not mean every wider distribution is valid. If samples make a DCF result unavailable, report invalid runs and use valid outcomes as the statistical denominator; do not replace them with zero or hide them.

A second native run reproduced every sampled input and Equity Value exactly for this fixture and seed. Reproducibility does not guarantee convergence, correct assumptions, funding survival or real-world probability. No distress/default model or automatic investment recommendation is implied.

Related decisions and model reference

For adjacent questions: DCF Valuation Model; Monte Carlo Financial Model: Configure, Run and Check Results; Monte Carlo Simulation in Finance: Method, Uses and Limits; P10, P50 and P90 in Financial Models: Read the Convention First.

For the exact controls and source behavior, use Stochastic: uncertainty through the model and Stochastic input configuration and bounds.