Reference no: EM131668718

Question: Consider again Problem. Through a series of Web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand 5 4000 2 6p where p is the price of the e-book.

a. Update your spreadsheet model constructed for Problem 3 to take into account this demand function.

b. Use Goal Seek to calculate the price that results in breakeven.

c. Use a data table that varies price from $50 to $400 in increments of $25 to find the price that maximizes profit.

Problem: Eastman Publishing Company is considering publishing an electronic textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and Web site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell access to the book for $46 each.

a. Build a spreadsheet model to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3500 copies?

b. Use a data table to vary demand from 1000 to 6000 increments of 200 to assess the sensitivity of profit to demand.

c. Use Goal Seek to determine the access price per copy that the publisher must charge to break even with a demand of 3500 copies.