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The Monte Carlo simulation was created to overcome a perceived disadvantage of other methods of estimating a probable outcome. A Monte Carlo simulation takes the variable that has uncertainty and assigns it a random value. This process is repeated again and again while assigning many different values to the variable in question. Once the simulation is complete, the results are averaged to arrive at an estimate. A Monte Carlo simulation is a way to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables.
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