How do you build a probabilistic cash flow model with uncertain drivers?

How do you build a probabilistic cash flow model with uncertain drivers?

• A. Simulate only revenues with no uncertainty.
• B. Assign distributions to each cash flow driver, simulate across periods, and aggregate to project NPV/IRR.
• C. Use a fixed discount rate and fixed cash flows.
• D. Use a single point estimate for all drivers.

Answer: (B)