question 1

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 $145,000. Variable processing costs are estimated to be $5 per book. The publisher plans to sell single-user access to the book for $43. 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 =4,0006p, where 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. 5