Estimate the company expected annual profit

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Question

A hardware company sells a lot of low-cost, high-volume products. For one such product, it is equally likely that annual unit sales will be low or high. If sales are low (30,000), the company can sell the product for $20 per unit. If sales are high (70,000),a competitor will enter and the company will be able to sell the product for only $15 per unit. The variable cost per unit has a 20% chance of being $10, a 60%chance of being $11, and a 20% chance of being $12.Annual fixed costs are $20,000.

Use simulation to estimate the company's expected annual profit.

Reference no: EM133588687

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