1. Sam wants to start a business after his graduation. He is planning to start up a restaurant. After conducting market research, he estimates that his initial investment to buy some brand-new cooking equipment will be $150,000. For each dinner set, he must spend $70 toward raw materials, labor, and other variable spending. He plans to produce as many as the market demands. He expects that he can sell each dinner set for $120.

1. Assume that every unit of dinner set that is sold, write an expression for the profit in terms of cost and revenue.
2. By formulating the model in an Excel spreadsheet, how many dinner sets does Sam need to sell to reach a breakeven? Write down your answer in the Word file and show your model in Excel.
3. Sam determines that by spending one-time expenditure of $3,000 toward advertising through online media, he can increase the sales volume by 100 dinner sets. Should he spend on advertising? What is the profit/loss if Sam decided to spend on advertising? Explain your answer in the Word file and show your model in Excel.

2. Now, Sam concerns that the market demand does not look very promising, and he may not be able to sell more than the breakeven volume. Therefore, instead of buying brand-new equipment, he plans on buying some used equipment for $130,000 to reduce his fixed cost. Since equipment are secondhand, which forces his employees to work at a slower pace, thus increasing the variable cost per dinner set by additional $10. Will these changes reduce his breakeven point? Explain your answer in the Word file and show your model in Excel.