2. The management of a company is considering the question of marketing a new product. The...

 

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2. The management of a company is considering the question of marketing a new product. The investment or the fixed cost required in the project is K5 000. There are three factors which are uncertain viz. the selling price, variable cost and the annual sales volume. The product has a life of only one year. The management feel as follows about the various possible levels of these three factors: Selling price probability Variable cost probability Sales probability volume (units) 3000 К4 0.3 K2 0.1 0.2 5 0.5 3 0.6 4000 0.4 6. 0.2 4 0.3 5000 0.4 A to apply Monte Carlo simulation asses the average profit from the said investment on the basis of 25 trials. Hint :Profit = (price - cost) (volume) - (K5000) %3D 2. The management of a company is considering the question of marketing a new product. The investment or the fixed cost required in the project is K5 000. There are three factors which are uncertain viz. the selling price, variable cost and the annual sales volume. The product has a life of only one year. The management feel as follows about the various possible levels of these three factors: Selling price probability Variable cost probability Sales probability volume (units) 3000 К4 0.3 K2 0.1 0.2 5 0.5 3 0.6 4000 0.4 6. 0.2 4 0.3 5000 0.4 A to apply Monte Carlo simulation asses the average profit from the said investment on the basis of 25 trials. Hint :Profit = (price - cost) (volume) - (K5000) %3D

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Solution Selling price probability Cumulative probability Random number range 4 03 03 0029 5 05 08 3... View the full answer