|Every financial investment contains some | |To see how the risk matrix (see below) described in this tutorial is used, please |

|level of financial risk. This risk is | |take a look at FinanceIsland's ROI analysis tool. You can try it out

|usually expressed through the discount rate | |by subscribing for a free trial.

|used in the financial analysis. Since the | |

|risk varies from investment to investment, | |[pic]

|the discount rate needs to vary as well. | |

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|FinanceIsland's ROI analysis tool with Monte| |

|Carlo simulation enhances your typical net | |

|present value (NPV) analysis not only by | |

|embedding Monte Carlo simulation, but also | |

|by helping you to choose a project-specific | |

|discount rate. This project-specific | |

|discount rate allows for "apples-to-apples" | |

|comparison of independent investments | |