Artie Siegel, an MBA student, has been having problems balancing his checkbook. His monthly income is derived from a graduate research assistantship; however, he also makes extra money in most months by tutoring undergraduates in their quantitative analysis course. His historical chances of various
Artie Siegel, an MBA student, has been having problems balancing his checkbook. His monthly income is derived from a graduate research assistantship; however, he also makes extra money in most months by tutoring undergraduates in their quantitative analysis course. His historical chances of various income levels are shown in the following table:
|
Monthly Income* ($) |
Probability |
|
350 |
0.40 |
|
400 |
0.20 |
|
450 |
0.30 |
|
500 |
0.10 |
*Assume that this income is received at the beginning of each month.
Siegel’s expenditures also vary from month to month, and he estimates that they will follow this distribution:
|
Monthly Expenses ($) |
Probability |
|
300 |
0.10 |
|
400 |
0.45 |
|
500 |
0.30 |
|
600 |
0.15 |
He begins his final year with $600 in his checking account. Simulate the entire year (12 months) on the next page and discuss Siegel’s financial picture, i.e., will he be able to keep his head above water--(out of debt)? What is his expected average profit for the 12 months? Use the random numbers below.
Random numbers for Income and Expenses
|
Income |
85 |
54 |
73 |
95 |
9 |
19 |
81 |
2 |
76 |
55 |
57 |
1 |
|
Expenses |
99 |
44 |
1 |
80 |
95 |
72 |
75 |
16 |
32 |
57 |
31 |
32 |
Please show the simulation solution from Excel. How do the random #s for income and expenses get entered on the spreadsheet?
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