B) The manager of a tourist attraction is considering whether to open on 1 January, a day when the attraction has, in previous years, been closed. The attraction has a daily capacity of 1,000 visitors. If the attraction opens for business on that day it will incur additional specific fixed costs of $30,000. The contribution from the sale of tickets would be $25 per visitor. The number of visitors is uncertain but based on experience it is expected to be as follows: Probability Number of Visitors 800 visitors 900 visitors 1,000 visitors 50% 30% 20% It is expected that visitors will also purchase souvenirs and refreshments. The contribution which would be made from these sales has been estimated as follows: Spending per Visitors $8 per visitor Probability 35% $10 per visitor 40% $12 per visitor 25% Required: Calculate whether it is worthwhile opening the tourist attraction on 1 January. You should use expected value as the basis of your analysis.
B) The manager of a tourist attraction is considering whether to open on 1 January, a day when the attraction has, in previous years, been closed. The attraction has a daily capacity of 1,000 visitors. If the attraction opens for business on that day it will incur additional specific fixed costs of $30,000. The contribution from the sale of tickets would be $25 per visitor. The number of visitors is uncertain but based on experience it is expected to be as follows: Probability Number of Visitors 800 visitors 900 visitors 1,000 visitors 50% 30% 20% It is expected that visitors will also purchase souvenirs and refreshments. The contribution which would be made from these sales has been estimated as follows: Spending per Visitors $8 per visitor Probability 35% $10 per visitor 40% $12 per visitor 25% Required: Calculate whether it is worthwhile opening the tourist attraction on 1 January. You should use expected value as the basis of your analysis.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I would like to get answers for question A) and B)
The question is attached below...
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
Transcribed Image Text:B) The manager of a tourist attraction is considering whether to open on 1 January, a day when the
attraction has, in previous years, been closed. The attraction has a daily capacity of 1,000 visitors. If
the attraction opens for business on that day it will incur additional specific fixed costs of $30,000.
The contribution from the sale of tickets would be $25 per visitor. The number of visitors is uncertain but
based on experience it is expected to be as follows:
Probability
Number of Visitors
800 visitors
900 visitors
1,000 visitors
50%
30%
20%
It is expected that visitors will also purchase souvenirs and refreshments. The contribution which would be
made from these sales has been estimated as follows:
Spending per Visitors
$8 per visitor
Probability
35%
$10 per visitor
40%
$12 per visitor
25%
Required: Calculate whether it is worthwhile opening the tourist attraction on 1 January. You should use
expected value as the basis of your analysis.
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