Bristol

Printing Company currently leases its only copy machine for

$1,400

a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based. Under the new agreement,

Bristol

would pay a commission for its printing at a rate of

$20

for every 500 pages printed. The company currently charges

$0.29

per page to its customers. The paper used in printing costs the company

$0.11

per page and other variable costs, including hourly labor, amount to

$0.13

per page.

Requirement 3.

Bristol

estimates that the company is equally likely to sell

30,000,

40,000,

50,000,

60,000,

or

70,000

pages of print. Using information from the original problem, prepare a table that shows the expected profit at each sales level under the fixed leasing agreement and under the commission-based agreement. What is the expected value of each agreement? Which agreement should

Bristol

choose?

Begin with the fixed leasing agreement. (Use parentheses or a minus sign for losses.)

Fixed leasing agreement
			Expected
Sales level	Profit/(Loss)		Profit/(Loss)
30,000
40,000
50,000
60,000
70,000
Total expected profit/(loss)