Jim has been employed at Gold Key Realty at a salary of $2,000 per month during the
Question:
(1) A 25% raise to $2,500 per month;
(2) A base salary of $1,000 plus $600 per house sold; or,
(3) A straight commission of $1,000 per house sold. Over the past year, Jim has sold up to 6 homes in a month. Use Excel to conduct the following analyses:
a. Compute the monthly salary payoff table for Jim. Hint: There are three decision alternatives (salary plans) and seven states of nature (the number of houses sold monthly).
b. For this payoff table find Jim's optimal decision using:
(1) The conservative approach,
(2) Minimax regret approach.
c. Suppose that during the past year the following is Jim's distribution of home sales. If one assumes that this a typical distribution for Jim's monthly sales, which salary plan should Jim select? Use the relative frequency approach to assign probabilities to each state of nature.
Home Sales 0 1 2 3 4 5 6
Number of Months 1 2 1 2 1 3 2
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Related Book For
Auditing a business risk appraoch
ISBN: 978-0324375589
6th Edition
Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston
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