Question

**Problem 16-05
(Algorithmic)**

To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3600, and the average first-year commission for each new account opened is $5500. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that he/she will open a new account.

- Determine the equation for computing Gustin’s profit per
seminar, given values of the relevant parameters. Round your
answers to the nearest dollar.

Profit = (New Accounts Opened × $__________ ) – $ __________ - What type of random variable is the number of new accounts
opened? (
*Hint*: Review Appendix 16.1 for descriptions of various types of probability distributions.)

The number of new accounts opened is a**__________**random variable with trials and probability of a success on a single trial.*(Dropdown = binomial, discrete, continuous)* - Assume that the number of new accouts you get randomly
is:

**Simulation Trial****New Accounts**1 0 2 0 3 0 4 0 5 2 6 1 7 1 8 0 9 1 10 0 11 0 12 0 13 0 14 1 15 0 16 1 17 0 18 1 19 1 20 0 21 0 22 0 23 0 24 0 25 0

Construct a spreadsheet simulation model to analyze the profitability of Gustin’s seminars. Round the answer for the expected profit to the nearest dollar. Round the answer for the probability of a loss to 2 decimal places.

The expected profit from a seminar is $__________ and there is a __________ probability of a loss.

Would you recommend that Gustin continue running the seminars?

Gustin __________ the seminars in their current format.*(Dropdown = should continue to run, should rise the price of, should consider discontinuing)* - How large of an audience does Gustin need before a seminar’s
expected profit is greater than zero? Use Trial-and-error method to
answer the question. Round your answer to the nearest whole
number.

__________ attendees

**QUANTITATIVE METHODS FOR BUSINESS 13
EDITION**

Answer #1

To generate leads for new business, Gustin Investment Services
offers free financial planning seminars at major hotels in
Southwest Florida. Gustin conducts seminars for groups of 25
individuals. Each seminar costs Gustin $3000, and the average
first-year commission for each new account opened is $5300. Gustin
estimates that for each individual attending the seminar, there is
a 0.01 probability that he/she will open a new account.
Determine the equation for computing Gustin’s profit per
seminar, given values of the relevant...

To generate leads for new business, Gustin Investment Services
offers free financial planning seminars at major hotels in
Southwest Florida. Gustin conducts seminars for groups of 25
individuals. Each seminar costs Gustin $3900, and the average
first-year commission for each new account opened is $4500. Gustin
estimates that for each individual attending the seminar, there is
a 0.01 probability that he/she will open a new account.
Simulation Trial
New Accounts
1
0
2
1
3
0
4
0
5
1...

An Investment firm offers free financial planning seminars at
major hotels for groups of 30 individuals. Each seminar costs them
$4,000 and the average first-year commission for each new
enrollment is $6,000. The firm estimates that for each individual
attending the seminar, there is a 0.05 probability that he/she will
enroll. Calculate the expected profit per seminar.
Answer: $_______
Would you recommend the invest firm to continue running the
seminar? True Or False

I am having problems with an assignment for my class, I am
struggling with part a of the following question. I included parts
b-d as these additional questions may influence the answer to part
a
To generate leads for new business, Gustin Investment Services
offers free financial planning seminars at major hotels in
Southwest Florida. Gustin conducts seminars for groups of 25
individuals. Each seminar costs Gustin $3500, and the average
first-year commission for each new account opened is $5000....

Problem 12-14 (Algorithmic)
The management of Madeira Manufacturing Company is considering
the introduction of a new product. The fixed cost to begin the
production of the product is $30,000. The variable cost for the
product is uniformly distributed between $20 and $25 per unit. The
product will sell for $55 per unit. Demand for the product is best
described by a normal probability distribution with a mean of 1,200
units and a standard deviation of 200 units. Develop an Excel...

Problem 12-21 (Algorithmic)
South Central Airlines operates a commuter flight between
Atlanta and Charlotte. The plane holds 25 passengers, and the
airline makes a $96 profit on each passenger on the flight. When
South Central takes 23 reservations for the flight, experience has
shown that, on average, two passengers do not show up. As a result,
with 25 reservations, South Central is averaging 23 passengers with
a profit of 23(96) = $2,208 per flight. The airline operations
office has asked...

Problem 12-11 (Algorithmic)
In preparing for the upcoming holiday season, Fresh Toy Company
(FTC) designed a new doll called The Dougie that teaches children
how to dance. The fixed cost to produce the doll is $150,000. The
variable cost, which includes material, labor, and shipping costs,
is $39 per doll. During the holiday selling season, FTC will sell
the dolls for $49 each. If FTC overproduces the dolls, the excess
dolls will be sold in January through a distributor who...

(All answers were generated using 1,000 trials and native Excel
functionality.)
The management of Madeira Computing is considering the
introduction of a wearable electronic device with the functionality
of a laptop computer and phone. The fixed cost to launch this new
product is $300,000. The variable cost for the product is expected
to be between $160 and $240, with a most likely value of $200 per
unit. The product will sell for $300 per unit. Demand for the
product is...

Problem 12-03 (Algorithmic)
PortaCom manufactures notebook computers and related equipment.
PortaCom's product design group developed a prototype for a new
high-quality portable printer. The new printer features an
innovative design and has the potential to capture a significant
share of the portable printer market. Preliminary marketing and
financial analyses provided the following selling price, first-year
administrative cost, and first-year advertising cost: Selling price
= $249 per unit Administrative cost = $400,000 Advertising cost =
$600,000 In the simulation model for...

The Bartram-Pulley Company (BPC) must decide between two
mutually exclusive investment projects. Each project costs $6,000
and has an expected life of 3 years. Annual net cash flows from
each project begin 1 year after the initial investment is made and
have the following probability distributions:
PROJECT A
PROJECT B
Probability
Net Cash
Flows
Probability
Net Cash
Flows
0.2
$5,000
0.2
$ 0
0.6
6,750
0.6
6,750
0.2
8,000
0.2
21,000
BPC has decided to evaluate the riskier project at a...

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