Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $148,000. Variable processing costs are estimated to be $5 per book. The publisher plans to sell single-user access to the book for $42.

Through a series of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand = 4,000 6p, where p is the price of the e-book.

(a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated by your model for the given costs and single user access price (in dollars).

$ =

(b)Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.)

$ =

(c) Use a data table that varies price from $50 to $400 in increments of $25 to find the price (in dollars) that maximizes profit.

$335.83 (This answer is correct.)