1) The Monte Carlo method is used to determine the expected value of random variables by running multiple simulations or trials. 2) In this example, a Monte Carlo simulation is conducted in Microsoft Excel to calculate the expected total cost of a project with 6 activities that each have a range of possible costs. 3) The simulation involves generating random costs for each activity based on the minimum and maximum values, calculating a total cost, and repeating this process 362 times to estimate the expected project cost within 2% error.