A new product will sell for $8. The company expects to sell around 900,000 units. (Use...

A new product will sell for $8. The company expects to sell around 900,000 units. (Use a normal distribution with a mean of 900,000 and a standard deviation of 300,000.) Fixed costs are normally distributed with a mean of $700,000 and a standard deviation of $50,000. Unit variable costs are also normally distributed with a mean of $3 and a standard deviation of $0.25. Selling expenses are lognormally distributed with a mean of $900,000 and a standard deviation of $50,000.

a. What is the expected value of profit for this product?

b. What is the probability that profit will exceed $3 million?

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Expert Solution

milcah answered 1 week ago

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