Question
Develop a simulation model for a three-year finan-cial analysis of total profit based on the following data and information. Sales volume in the first year
Develop a simulation model for a three-year finan-cial analysis of total profit based on the following data and information. Sales volume in the first year is estimated to be 100,000 units and is projected to grow at a rate that is normally distributed with a mean of 7% per year and a standard deviation of 4%. The selling price is $10, and the price increase is normally distributed with a mean of $0.50 and stan-dard deviation of $0.05 each year. Per-unit variable costs are $3, and annual fixed costs are $200,000. Per-unit costs are expected to increase by an amount normally distributed with a mean of 5% per year and standard deviation of 2%. Fixed costs are expected to increase following a normal distribution with a mean of 10% per year and standard deviation of 3%. Based on 500 simulation trials, compute summary statistics for the average three-year undiscounted cumulative profit.
Please provide Excel step by steps and detailed explanation to results.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started