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I'm not sure if my numbers are correct the overall profit for the 2nd option is different. I got -4000,+5000, and +14,000 in profit for the American University outcomes but the solution show different result

I'm not sure if my numbers are correct the overall profit for the 2nd option is different. I got -4000,+5000, and +14,000 in profit for the American University outcomes but the solution show different result

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question: I'm not sure if my numbers are correct the overall profit for the 2nd option is different. I got -4000,+5000, and +14,000 in profit for the American University outcomes but the solution show different result

The Academy of Forecasting has to decide on a location for its annual symposium. Two locations are being considered: the Heraton hotel in New York and the campus of Atlantic University. The profit that the academy will earn from the symposium depends on the cost of the location and the number of delegates attending. The cost to the Academy of holding the symposium at the Heraton will be a fixed charge of $14000 plus and extra $100 per delegate. The Atlantic University will charge $10,000 plus an extra $150 per delegate. Delegates will pay $300 to attend the symposium, irrespective of which location is chosen. The number of delegates attending the symposium is likely to depend on the location. For simplicity, subjective probability distributions for the number of delegates attending at each location have been approximated by the three-point distributions shown below. Heraton hotel No. of delegates attending 50 100 150 Probability 0.2 0.5 0.3 Atlantic University No. of delegates attending 40 100 160 Probability 0.4 0.5 0.1 …….…….…….ŻLIKĘ NA Chapter 6 Answers to Additional Exercises Question 1 a) The possible profits at the two locations are calculated as follows: Heraton Hotel No. of delegates 50 100 150 Atlantic University No. of delegates 40 100 160 Revenue $ Cost $ Profit 15000 19000 -4000 30000 24000 6000 45000 29000 16000 Revenue $ 12000 14800 -2800 30000 22000 8000 48000 29200 18800 Cost $ Therefore the expected Heraton Hotel: Atlantic university: Profit profits are: (0.2 x -4000) + (0.5 x 6000) + (0.3 x 16000) = $7000 (0.4 x -2800) + (0.5 x 8000) + (0.1 x 18800) = $4760
Transcribed Image Text:The Academy of Forecasting has to decide on a location for its annual symposium. Two locations are being considered: the Heraton hotel in New York and the campus of Atlantic University. The profit that the academy will earn from the symposium depends on the cost of the location and the number of delegates attending. The cost to the Academy of holding the symposium at the Heraton will be a fixed charge of $14000 plus and extra $100 per delegate. The Atlantic University will charge $10,000 plus an extra $150 per delegate. Delegates will pay $300 to attend the symposium, irrespective of which location is chosen. The number of delegates attending the symposium is likely to depend on the location. For simplicity, subjective probability distributions for the number of delegates attending at each location have been approximated by the three-point distributions shown below. Heraton hotel No. of delegates attending 50 100 150 Probability 0.2 0.5 0.3 Atlantic University No. of delegates attending 40 100 160 Probability 0.4 0.5 0.1 …….…….…….ŻLIKĘ NA Chapter 6 Answers to Additional Exercises Question 1 a) The possible profits at the two locations are calculated as follows: Heraton Hotel No. of delegates 50 100 150 Atlantic University No. of delegates 40 100 160 Revenue $ Cost $ Profit 15000 19000 -4000 30000 24000 6000 45000 29000 16000 Revenue $ 12000 14800 -2800 30000 22000 8000 48000 29200 18800 Cost $ Therefore the expected Heraton Hotel: Atlantic university: Profit profits are: (0.2 x -4000) + (0.5 x 6000) + (0.3 x 16000) = $7000 (0.4 x -2800) + (0.5 x 8000) + (0.1 x 18800) = $4760
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