This question uses Crystal Ball with Excel.

After spending 10 years as an assistant manager for a large restaurant chain, Liana has decided she'd like to become her own boss. The owner of Bella Luna, an Italian Restaurant, wants to sell the restaurant to Liana for $200,000 to be paid in installments of $50,000 for each of the next four years. According to the current owner, the restaurant usually brings in revenue of around $260,000 each year, but it can be as low as $190,000 or as high as $300,000. A statistical analysis of the operating costs indicate that they average 62% of that year's sales revenue, with a standard deviation of 4% of that year's sales revenue, where this operating cost rate tends to follow the normal distribution. Until the restaurant is paid for, Liana will make substantially less than her current incomebut she will be her own boss. Realizing that some uncertainty is involved in this decision, Liana wants to simulate what level of net cash flow (considering revenue, operating costs, and the installment payments) she can expect to earn during the next four years as she operates and pays for the restaurant. Given the money she has in savings, Liana thinks she can get by for the next four years if she can net at least $40,000 from the restaurant each year (considering revenue, operating costs, and the installment payments). You may ignore the time value of money for this problem. Build a simulation model on the provided spreadsheet. (Please use the cell and run preferences given below.) Then use Crystal Ball to determine answers to each of the following questions, and enter your answers where indicated in the orange cells on the provided spreadsheet. Your answers should be based on the results of a 1000-trial simulation and the Crystal Ball chart(s) showing the numbers used to justify your answers should be pasted in the designated location of your spreadsheet (use Copy Chart from the Edit menu of the forecast chart).

a. How much net cash flow (considering sales, operating costs, and the installment payments) can Liana expect (on average) from the restaurant in total over the next four years combined?

b. What is the probability that she will net at least $160 thousand in total over the next four years combined?

c. What is the overall probability that Liana will net at least $40,000 in all four of the next four years? (I'm looking for a single overall probability that the she will net at least $40,000 for each and every one of the four years, rather than individual probabilities for each year.)

IMPORTANT CRYSTAL BALL INSTRUCTIONS:

Before adding any assumption cells, please turn on the following settings in Cell Preferences:

-Add Comment to Cell

-Set Cell Value to Distribution Mean

Please use the following settings in Run Preferences:

-1000 Trials

-Use Same Sequence of Random Numbers with an Initial Seed Value of 999

- Latin Hypercube Sampling Method with a Sample Size of 500.

(If these settings are grayed out, Reset the simulation before choosing Run Preferences.)

When setting up assumption cells:

-Indicate the distribution and parameters in separate data cells near the assumption cell.

-Use cell references to these parameter data cells within the assumption cell dialog box