To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels i
Posted: Mon Jul 11, 2022 11:43 am
To generate leads for new business, Gustin Investment Servicesoffers free financial planning seminars at major hotels inSouthwest Florida. Gustin conducts seminars for groups of 25individuals. Each seminar costs Gustin $3,500, and the averagefirst-year commission for each new account opened is $5,000. Gustinestimates that for each individual attending the seminar, there isa 0.01 probability that he/she will open a new account.
(a)
Determine the equation for computing Gustin's profit perseminar, given values of the relevant parameters.
Profit = (New AccountsOpened ✕ 5,000) − 3,500Profit =(3,500 ✕ 5,000) − New AccountsOpened Profit = New AccountsOpened − (5,000 ✕ 3,500)Profit = (New AccountsOpened ✕ 3,500) − 5,000Profit =5,000 − (New Accounts Opened ✕ 3,500)
(b)
What type of random variable is the number of new accountsopened? Hint: Review Appendix 12.1 for descriptionsof various types of probability distributions.
binomialcontinuous discreteuniformnormalinteger uniform
(c)
Construct a spreadsheet simulation model to analyze theprofitability of Gustin's seminars. Would you recommend that Gustincontinue running the seminars? (Perform at least 1,000 simulations.Round your answers to two decimal places.)
expected profit=$ probability of a loss=
Gustin shouldconsider ---Select--- continuing discontinuing theseminars in their current format.
Show your work. Upload your spreadsheet. (Submit a file with amaximum size of 1 MB.)
(a)
Determine the equation for computing Gustin's profit perseminar, given values of the relevant parameters.
Profit = (New AccountsOpened ✕ 5,000) − 3,500Profit =(3,500 ✕ 5,000) − New AccountsOpened Profit = New AccountsOpened − (5,000 ✕ 3,500)Profit = (New AccountsOpened ✕ 3,500) − 5,000Profit =5,000 − (New Accounts Opened ✕ 3,500)
(b)
What type of random variable is the number of new accountsopened? Hint: Review Appendix 12.1 for descriptionsof various types of probability distributions.
binomialcontinuous discreteuniformnormalinteger uniform
(c)
Construct a spreadsheet simulation model to analyze theprofitability of Gustin's seminars. Would you recommend that Gustincontinue running the seminars? (Perform at least 1,000 simulations.Round your answers to two decimal places.)
expected profit=$ probability of a loss=
Gustin shouldconsider ---Select--- continuing discontinuing theseminars in their current format.
Show your work. Upload your spreadsheet. (Submit a file with amaximum size of 1 MB.)