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To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3,500, and the average first-year commission for each new account opened is $5,000. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that he/she will open a new account. (a) Determine the equation for computing Gustin's profit per seminar, given values of the relevant parameters. O Profit= (New Accounts Opened x 3,500)- 5,000 O Profit= 5,000 (New Accounts Opened x 3,500) O Profit= (New Accounts Opened x 5,000) - 3,500 O Profit (3,500 x 5,000) New Accounts Opened O Profit = New Accounts Opened (5,000 x 3,500) (b) What type of random variable is the number of new accounts opened? Hint: Review Appendix 12.1 for descriptions of various types of probability distributions. O continuous O discrete uniform O integer uniform binomial O normal (c) Construct a spreadsheet simulation model to analyze the profitability of Gustin's seminars. Would you recommend that Gustin continue running the seminars? (Perform at least 1,000 simulations. Round your answers to two decimal places.) expected profit = $ probability of a loss. = Gustin should consider ---Select--- the seminars in their current format. (d) How large of an audience does Gustin need before a seminar's expected profit is greater than zero? Trial-and-error shows that, with ---Select--- attendees, the seminar breaks even. ---Select--- is greater than zero by a non-negligible amount. ✓attendees are necessary before the expected profit from the seminar

To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3,500, and the average first-year commission for each new account opened is $5,000. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that he/she will open a new account. (a) Determine the equation for computing Gustin's profit per seminar, given values of the relevant parameters. O Profit= (New Accounts Opened x 3,500)- 5,000 O Profit= 5,000 (New Accounts Opened x 3,500) O Profit= (New Accounts Opened x 5,000) - 3,500 O Profit (3,500 x 5,000) New Accounts Opened O Profit = New Accounts Opened (5,000 x 3,500) (b) What type of random variable is the number of new accounts opened? Hint: Review Appendix 12.1 for descriptions of various types of probability distributions. O continuous O discrete uniform O integer uniform binomial O normal (c) Construct a spreadsheet simulation model to analyze the profitability of Gustin's seminars. Would you recommend that Gustin continue running the seminars? (Perform at least 1,000 simulations. Round your answers to two decimal places.) expected profit = $ probability of a loss. = Gustin should consider ---Select--- the seminars in their current format. (d) How large of an audience does Gustin need before a seminar's expected profit is greater than zero? Trial-and-error shows that, with ---Select--- attendees, the seminar breaks even. ---Select--- is greater than zero by a non-negligible amount. ✓attendees are necessary before the expected profit from the seminar

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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3 y To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3,500, and the average first-year commission for each new account opened is $5,000. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that he/she will open a new account. (a) Determine the equation for computing Gustin's profit per seminar, given values of the relevant parameters. O Profit = (New Accounts Opened x 3,500) - 5,000 O Profit= 5,000 (New Accounts Opened x 3,500) O Profit (New Accounts Opened x 5,000) - 3,500 O Profit = (3,500 x 5,000) New Accounts Opened O Profit New Accounts Opened (5,000 x 3,500) (b) What type of random variable is the number of new accounts opened? Hint: Review Appendix 12.1 for descriptions of various types of probability distributions. O continuous O discrete uniform O integer uniform O binomial O normal (c) Construct a spreadsheet simulation model to analyze the profitability of Gustin's seminars. Would you recommend that Gustin continue running the seminars? (Perform at least 1,000 simulations. Round your answers to two decimal places.) expected profit = $ probability of a loss = Gustin should consider ---Select--- ✓the seminars in their current format. (d) How large of an audience does Gustin need before a seminar's expected profit is greater than zero? Trial-and-error shows that, with ---Select--- attendees, the seminar breaks even. ---Select--- is greater than zero by a non-negligible amount. SHOW WORK ON EXCEL SPREADSHEET. ✓attendees are necessary before the expected profit from the seminar
Transcribed Image Text:3 y To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3,500, and the average first-year commission for each new account opened is $5,000. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that he/she will open a new account. (a) Determine the equation for computing Gustin's profit per seminar, given values of the relevant parameters. O Profit = (New Accounts Opened x 3,500) - 5,000 O Profit= 5,000 (New Accounts Opened x 3,500) O Profit (New Accounts Opened x 5,000) - 3,500 O Profit = (3,500 x 5,000) New Accounts Opened O Profit New Accounts Opened (5,000 x 3,500) (b) What type of random variable is the number of new accounts opened? Hint: Review Appendix 12.1 for descriptions of various types of probability distributions. O continuous O discrete uniform O integer uniform O binomial O normal (c) Construct a spreadsheet simulation model to analyze the profitability of Gustin's seminars. Would you recommend that Gustin continue running the seminars? (Perform at least 1,000 simulations. Round your answers to two decimal places.) expected profit = $ probability of a loss = Gustin should consider ---Select--- ✓the seminars in their current format. (d) How large of an audience does Gustin need before a seminar's expected profit is greater than zero? Trial-and-error shows that, with ---Select--- attendees, the seminar breaks even. ---Select--- is greater than zero by a non-negligible amount. SHOW WORK ON EXCEL SPREADSHEET. ✓attendees are necessary before the expected profit from the seminar
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