Reference no: EM132960368
Question - ScootAround Inc. owns a scooter service station in California, where the climate is warm year-round. Customers have often expressed the need, especially during summer, for a cold drink facility at the station. The Cody Beverage Company has offered to lease ScootAround a cold drink vending machine for $200 per month plus $0.20 per can of cold drinks. ScootAround would sell each can of cold drink for $0.85.
A regression equation estimated based on 30 observations gave the following prediction of sales of cans of cold drinks:
Sales units = 0.90 (number of customers) + 60 per month. The standard error of the estimate is 80.
Refer to the "Present value and t-distribution tables"
Required - You must provide all the detailed supporting calculations.
a. Assuming that ScootAround expects 3,000 customers in June; what are the best estimates of number of cans of cold drinks sold, and income for the month of June?
b. What range of income can ScootAround expect with 90% confidence in June?
c. What is the required number of customers ScootAround must have to be 90% confident to make a profit of $700 in the month of June?
d. What is the probability that ScootAround would earn zero income in June?