Cash Money Records is considering publishing a new music album. The fixed cost of an album preparation, studio time, and guest appearances is estimated to be $850,000. Variable costs are estimated to be $2 per album. The music label plans to sell access to the album for $10 each at various online marketplaces.

(Report all Solutions on Blackboard with Excel documentation)

a. Build a spreadsheet model to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 115,000 purchases of the album?

b. Use a data table to vary demand from 100,000 to 300,000 increments of 50,000 to assess the sensitivity of profit to demand.

c. Use Goal Seek to determine the access price per copy that the record company must charge to break even with a demand of 235,000 copies.