A ropional tax preparation from is considering expanding and needs a financial model to analyze the decison to open a new store Uso the giver descripbon of the stuston to develop a Monte Care s mulation Clak here to youk the descrebiens of the model Click here to yow a vamole of 50 smudston trai insuts. mosi will vaties for uncerlan values with triangulat dsirititoen The not persent value is 1 (Hourd to the noarest dolar as nooded) (Rebund to the neares dohar as needed) Model description Key factors affecting this decision include the demographics of the proposed location, price points that can be achieved in the target market, and the availability of funds for marketing and advertising. Capital expenditures will be ignored because unused equipment from other locations can often be shifted to a new store for the first year until they can be replaced periodically through the fixed cost budget. The firm's target markets are communities with populations between 33,000 and 45,000 , assumed to be uniformly distributed. Market demand for tax preparation service is directly related to the number of households in the territory; approximately 15% of households are anticipated to use a tax preparation service. Assuming an average of 2.5 people per household, this can be expressed as 0.15 population/2.5. SPD estimates that its first-year demand will have a mean of 6% of the total market demand, and for every thousand dollars of advertising, the mean increases by 2%. The first-year demand is assumed to be normal with a standard deviation of 20% of the mean demand An advertising budget of $6,000 has been approved but is limited to 10% of annual revenues. Demand grows fairly aggressively in the second and third years and is assumed to have a triangular distribution with a minimum value of 19%, most likely value of 29%, and maximum value of 39%. After year 3 , demand growth is between 6% and 16%, with a most likely value of 9%. The average charge for each tax return is $150 and increases each year at a rate that is normally distributed with a mean of 3% and a standard deviation of 1%. Variable costs average $15 per customer and increase annually at a rate that is normally distributed with a mean of 3% and a standard deviation of 1.5%. Fixed costs are estimated to be approximately $40,000 for the first year and grow annually at a rate between 1.5% and 3%. Simulation Results nulation Results A ropional tax preparation from is considering expanding and needs a financial model to analyze the decison to open a new store Uso the giver descripbon of the stuston to develop a Monte Care s mulation Clak here to youk the descrebiens of the model Click here to yow a vamole of 50 smudston trai insuts. mosi will vaties for uncerlan values with triangulat dsirititoen The not persent value is 1 (Hourd to the noarest dolar as nooded) (Rebund to the neares dohar as needed) Model description Key factors affecting this decision include the demographics of the proposed location, price points that can be achieved in the target market, and the availability of funds for marketing and advertising. Capital expenditures will be ignored because unused equipment from other locations can often be shifted to a new store for the first year until they can be replaced periodically through the fixed cost budget. The firm's target markets are communities with populations between 33,000 and 45,000 , assumed to be uniformly distributed. Market demand for tax preparation service is directly related to the number of households in the territory; approximately 15% of households are anticipated to use a tax preparation service. Assuming an average of 2.5 people per household, this can be expressed as 0.15 population/2.5. SPD estimates that its first-year demand will have a mean of 6% of the total market demand, and for every thousand dollars of advertising, the mean increases by 2%. The first-year demand is assumed to be normal with a standard deviation of 20% of the mean demand An advertising budget of $6,000 has been approved but is limited to 10% of annual revenues. Demand grows fairly aggressively in the second and third years and is assumed to have a triangular distribution with a minimum value of 19%, most likely value of 29%, and maximum value of 39%. After year 3 , demand growth is between 6% and 16%, with a most likely value of 9%. The average charge for each tax return is $150 and increases each year at a rate that is normally distributed with a mean of 3% and a standard deviation of 1%. Variable costs average $15 per customer and increase annually at a rate that is normally distributed with a mean of 3% and a standard deviation of 1.5%. Fixed costs are estimated to be approximately $40,000 for the first year and grow annually at a rate between 1.5% and 3%. Simulation Results nulation Results