1. Estimate the effect on income of each of the options Rowe has suggested if Bradley estimates as follows:
   1. Increasing the price to commercial customers to$1,000 per hour would reduce demand by 30$.
   2. Reducing the price to commercial customers to$600 per hour would increase demand by 30%
   3. Increased promotion would increase sales by up to 30%. Bradley is unsure how much promotion this would take. (How much could be spent and still leave Prestige Data Services with no reported loss each month if commercial hours were increased 30%?)
   4. Reducing operations to 16 hours on weekdays and eight hours on Saturdays would result in a loss of 20% of commercial revenue hours.

Exhibit 1 Prestige Data Services Summary of Computer Utilization, First Quarter 2003 January February March 181 206 123 223 138 135 Revenue Hours Intercompany Commercial Total revenue hours Service hours Available hours Total hours 329 316 32 361 40 32 223 584 143 164 512 544 Exhibit 2 Prestige Data Services Summary Results of Operations, First Quarter 2003 January February March $82,400 $72,400 $89,200 Revenues Intercompany sales Commercial sales Computer use Other Total revenue Expenses Space costs: Rent Custodial services 98,400 9,241 $190,041 108,000 9,184 $189,584 110,400 12,685 $212,285 $8,000 1,240 9,240 $8,000 1,240 9,240 $8,000 1,240 9,240 95,000 5,400 95,000 5,400 95,000 5,400 Equipment costs Computer leases Maintenance Depreciation: Computer equipment Office equipment and fixtures Power 25,500 680 1,633 128,213 25,500 680 1,592 128,172 25,500 680 1,803 128,383 Wages and salaries Operations Systems development and maintenance Administration Sales 29,496 12,000 9,000 11,200 61,696 9,031 7,909 15,424 $231,513 $(41,472) 29,184 12.000 9,000 11,200 61,384 8,731 7,039 15,359 $229,925 $(40,341) 30,264 12,000 9,000 11,200 62,464/ 10,317 8,083 15,236 $233,723 $(21,438) Materials Sales promotions Corporate services Total expenses Net income (loss)