Question: Below is a spreadsheet for Trance Electronics. A B C D E F 1 Market size 1 , 0 0 0 , 0 0 0

Below is a spreadsheet for Trance Electronics.
A B C D E F
1 Market size 1,000,000
2 Unit (monthly Rx) revenue $50.00
3 Unit (monthly Rx) cost $20.00
4 Discount rate 8%
5
6 Project costs
7 R&D $50,000,000
8 Clinical Trials $90,000,000
9
10 Model
11
12 Year 12345
13 Market growth factor 20%20%20%20%
14 Market size
15 Market share growth rate 20%20%20%20%
16 Market share 7%
Suppose that the project manager of Trance Electronics has identified the following uncertain variables in the model:
Market size: normal with mean of 1,000,000 units and standard deviation of 300,000 units.
R&D costs: uniform between $40,000,000 and $60,000,000.
Clinical trial costs: normal with mean of $90,000,000 and standard deviation $2,000,000.
Annual market share growth rate: triangular with minimum =15%, maximum =25%, and most likely =20%.
Run the simulation for 5,000 trials and answer the following questions.
What cumulative profit in the fourth year is likely to be realized with a probability of 0.20?[Choose the nearest answer.]

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