• 1. Develop a simulation model in SPSS for a three-year financial analysis of total profit based on the following data and information. Sales volume in the first year is 100,000 units and is projected to grow at a rate that is normally distributed with a mean of 7% per year and a standard deviation of 4%. The selling price is $10 and the price increase each year is normally distributed with a mean of $0.50 and a standard deviation of $0.05 each year. Per-unit variable costs are $3, and annual fixed costs are $200,000. Per-unit variable costs are expected to increase by an amount normally distributed with a mean of 5% per a year and a standard deviation of 2%. Fixed costs are expected to increase following a normal distribution with a mean of 10% per year and a standard deviation of 3%.
• Report the descriptive statistics for profit each year and the cumulative profit. How confident are you that profits will increase each year? Use the percentiles report to answer this question and provide appropriate evidence. (NOTE: Sales, prices, and costs are NOT uncertain but rather the growth in each of these is uncertain. You should get a new growth value each year for each of the four variables for a total of eight uncertain items.)
• 2. TudorTech is a new software company that develops and markets productivity software for municipal government applications. In developing their income statement, the following formulas are used:
• Gross profit = Net sales - Cost of sales
• Net operating profit = Gross profit - Administrative expenses - Selling expenses
• Net income before taxes = Net operating profit - Interest expense
• Net income = Net income before taxes - taxes

Net sales are uniformly distributed between $600,000 and $1,200,000. Cost of sales is normally distributed with a mean of $540,000 and a standard deviation of $20,000. Selling expenses has a fixed component that is uniform between $75,000 and $110,000. There is also a variable component that is 7% of net sales. Administrative expenses are normal with a mean of $50,000 and a standard deviation of $3,500. Interest expenses are $10,000. The tax rate is 50%. Develop a simulation model in SPSS and report the descriptive statistics for net income and compute a 95% confidence interval for average net income.