1 (30 pts) IS A MEGAMILLIONS TICKET WORTH THE PRICE? Given the size of the payouts for the different prizes, and the odds of each type of win (all of which are available on the website), what is the Expected Value of a Megamillions ticket? Assume the current jackpot values for annuity and lump sum; no need to update them right before the due date, just be clear about the date and the jackpot values you are using. And assume you do not have to split the jackpot Remember to make some accounting for what you would actually "put in your pocket" rather than the lottery's claims about how much you would win; precise numbers out to the penny are not required, but reasonable estimates and assumptions are fine. Then calculate how big the jackpot would have to be for the Expected Value of a ticket to be equal to the $2 price of the ticket. Keep in mind all the same expected value and time value of money considerations, and estimate what the stated (annuity) jackpot value would have to be. 11 (10 pts] For these three products, what is the gross margin per unit, and the break-even volume in units? Product Price/unit Var cost/unit Fixed costs $GM/unit BE volume A $3.50 $1.75 $7,500,000 B $1,350 $875 $11,000,000 $110 $70 $2,750,000 If it turns out these (the numbers below) are the actual volumes sold for each product, calculate the net income for each product; if any product is below break- even, calculate a new price for each product to get back to break-even at these volumes. Product B $NI New Price? Actual Sales Volume 3,500,000 units 15,000 units 65,000 units 4 II (10 pts Three competing products are ranked, by customers, as follows on four criteria Product Crit Crit Crit A 2 5 2 8 4 8 3 2 5 5 In terms of their contribution to the value prop, the criteria are as follows: the first is 20%, the second is 35%, the third is 15%, and the fourth is the rest. What is the overall "score" for each product? Which product is favored by customers? Which is least favored? (hint-this is very similar to an EV problem) If you were the product Manager for the least favored product, name at least two things you could do to improve your relative position 1 (30 pts) IS A MEGAMILLIONS TICKET WORTH THE PRICE? Given the size of the payouts for the different prizes, and the odds of each type of win (all of which are available on the website), what is the Expected Value of a Megamillions ticket? Assume the current jackpot values for annuity and lump sum; no need to update them right before the due date, just be clear about the date and the jackpot values you are using. And assume you do not have to split the jackpot Remember to make some accounting for what you would actually "put in your pocket" rather than the lottery's claims about how much you would win; precise numbers out to the penny are not required, but reasonable estimates and assumptions are fine. Then calculate how big the jackpot would have to be for the Expected Value of a ticket to be equal to the $2 price of the ticket. Keep in mind all the same expected value and time value of money considerations, and estimate what the stated (annuity) jackpot value would have to be. 11 (10 pts] For these three products, what is the gross margin per unit, and the break-even volume in units? Product Price/unit Var cost/unit Fixed costs $GM/unit BE volume A $3.50 $1.75 $7,500,000 B $1,350 $875 $11,000,000 $110 $70 $2,750,000 If it turns out these (the numbers below) are the actual volumes sold for each product, calculate the net income for each product; if any product is below break- even, calculate a new price for each product to get back to break-even at these volumes. Product B $NI New Price? Actual Sales Volume 3,500,000 units 15,000 units 65,000 units 4 II (10 pts Three competing products are ranked, by customers, as follows on four criteria Product Crit Crit Crit A 2 5 2 8 4 8 3 2 5 5 In terms of their contribution to the value prop, the criteria are as follows: the first is 20%, the second is 35%, the third is 15%, and the fourth is the rest. What is the overall "score" for each product? Which product is favored by customers? Which is least favored? (hint-this is very similar to an EV problem) If you were the product Manager for the least favored product, name at least two things you could do to improve your relative position