The Use of Crystal Ball within a Spreadsheet to Analyze Capital-Budgeting Decisions in the Hospitality Industry

ABSTRACT The object of the paper is to show how Crystal Ball, an add-inn to a spreadsheet, can be used to provide better answers to capital-budgeting questions. While capital budgeting is not a new tool to analyze the uncertainty inherent in long-range investment decisions, recent technological developments now allow complex Monte Carlo simulations to be run on a personal computer within a “familiar” spreadsheet in a fraction of the time that was required just a few years ago. This paper shows how it is now possible to explicitly model uncertainty within the “point-and-click” environment that is within the grasp of most of today's spreadsheet users.