You have an innovative product that you have been selling for the past year. You have...

 

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You have an innovative product that you have been selling for the past year. You have decided to apply for a patent to protect your IP, but you are also aware that businesses deem a patented product more worthy, which will lead to increased sales. Suppose a wholesaler offers to buy your entire production and inventory for the year for $8M (you won't be able to sell anything else). Run a Monte Carlo simulation to determine if you should take the offer. Use the following assumptions: ● • ● ● There is a 50% chance that your product gets patented. Without a patent (base sales), you expect sales to follow a normal distribution, with a mean of $6 million and a standard deviation of $1.2 million. If it does get patented, your sales go up by 20% to 80%, with 40% being the most likely case (i.e., triangular distribution) You do not have to consider any costs or expenses. Part 2 - Simulation using Excel Run a Monte Carlo simulation using the Excel template provided. 1. Add formulas to (a) randomly sample from the base sales distribution, and (b) randomly generate whether the patent is awarded. Note: Random sampling from a triangular distribution is not a native Excel function; this formula has been provided for you. 2. Use a formula to combine the random inputs into the proper relationship to simulate sales. You have an innovative product that you have been selling for the past year. You have decided to apply for a patent to protect your IP, but you are also aware that businesses deem a patented product more worthy, which will lead to increased sales. Suppose a wholesaler offers to buy your entire production and inventory for the year for $8M (you won't be able to sell anything else). Run a Monte Carlo simulation to determine if you should take the offer. Use the following assumptions: ● • ● ● There is a 50% chance that your product gets patented. Without a patent (base sales), you expect sales to follow a normal distribution, with a mean of $6 million and a standard deviation of $1.2 million. If it does get patented, your sales go up by 20% to 80%, with 40% being the most likely case (i.e., triangular distribution) You do not have to consider any costs or expenses. Part 2 - Simulation using Excel Run a Monte Carlo simulation using the Excel template provided. 1. Add formulas to (a) randomly sample from the base sales distribution, and (b) randomly generate whether the patent is awarded. Note: Random sampling from a triangular distribution is not a native Excel function; this formula has been provided for you. 2. Use a formula to combine the random inputs into the proper relationship to simulate sales.

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1 a RANDMAXMINMIN b IFRAND0510 2 IFB11A112A1 This is a simple Monte Carlo simulation We are assuming ... View the full answer