Consider a firm that is introducing a new product. The firm identified 300 potential customers whose...

Consider a firm that is introducing a new product. The firm identified 300 potential customers whose probability of purchasing the product depends on age and gender as follows:

Female Under 60	Probability
Buy	0.6
Not	0.4

Female Over 60	Probability
Buy	0.4
Not	0.6

Male Under 60	Probability
Buy	0.55
Not	0.45

Male Over 60	Probability
Buy	0.45
Not	0.55

Using the spreadsheet of customer data provided, estimate the average number of product demand in each city: New York, Chicago, Los Angeles, and Seattle.

Expert Solution

Solution ::

To compute the average no of product demand for each of the 4 cities we will create 2x2 contingency table for gender vs age group(above 60 anf under 60) for each of the 4 cities. Then with the help of the given probabilities of buying the product for different age & gender we obtain the average/expected no of product demand. We first take the data as input in a Excel sheet then transform the ages in two categories below 60(as 0) and over 60(as 1), and create pivot table of gender and age for different cities as filter.The step by step solutions are given in the images.Hence the average no of product demand for each city New York ,Chicago, Los Angeles and Seattle are 34,9,6 and 2 respectively.

orchestra answered 1 year ago

Introducing a New Product Consider a firm that is introducing a new product. The firm identified...

Introducing a New Product Consider a firm that is introducing a new product. The firm identified 300 potential customers whose probability of purchasing the product depends on age and gender as follows: Female Under 60 Probability Buy 0.6 Not 0.4 Female Over 60 Probability Buy 0.4 Not 0.6 Male Under 60 Probability Buy 0.55 Not 0.45 Male Over 60 Probability Buy 0.45 Not 0.55 Using the spreadsheet of customer data provided, estimate the average number of product demand in each...

Consider the case of introducing a new product to the market with an initial investment of...

Consider the case of introducing a new product to the market with an initial investment of $350,000 that will be depreciating down to zero in 10 years with no salvage value. Price per unit is $50 and variable cost per unit is $18. Fixed costs are $8,000 per year. Market rate is 10% and tax rate is 20%. a) What is the financial break-even quantity? b) Calculate the net present value of the project.

Your firm is considering introducing a new product for which returns are expected to be as...

Your firm is considering introducing a new product for which returns are expected to be as follows: Year 1 to Year 3 (Inclusive): $2,000 per year Year 4 to Year 8 (Inclusive): $5,000 per year Year 9 to Year12 (Inclusive): $3,000 per year The introduction of the product requires an immediate outlay (expenditure) of $15,000 for equipment estimated to have a salvage value of $2,000 after 12 years. Compute the Internal Rate of Return (IRR) for the launch of this...

A firm is considers introducing a new production line for its new product the Squeaky Clean....

A firm is considers introducing a new production line for its new product the Squeaky Clean. The production start-up costs are estimated to be £30,000 while the cash revenues are estimated at £20,000 per year. Cash costs (including taxes) will be £14,000 per year. Production will be wound down in eight years’ time and the salvage value at this time will be £2,000. The discount rate on similar projects is 15%. The objective of the firm is to maximize shareholder...

Consider a firm whose total costs are given by TC(q) = 300 + 6q + 3q2....

Consider a firm whose total costs are given by TC(q) = 300 + 6q + 3q2. a) What is the minimum price at which the firm will produce positive output? b) What is the firm’s supply curve? If there are currently 300 firms in the market, what is the market supply curve? c) The market demand for this firm’s product is QD = 10800 - 50P. What is the shortrun market equilibrium price and quantity? d) Given the equilibrium you...

In introducing a new product: What type of cost should a business consider? What type of...

In introducing a new product: What type of cost should a business consider? What type of cost should a business ignore? What are some qualitative decisions a business should consider before introducing a new product?

A monopoly firm fears that a potential rival firm will invent a new, similar product and...

A monopoly firm fears that a potential rival firm will invent a new, similar product and enter the monopoly’s market. Therefore, both firms have an incentive to invent the new product. It is in the monopoly’s interest to make sure that it is the first to invent to maintain its monopoly power. Explain how can the monopoly guarantee it is the first to invent. [4 Marks] Patents were rated the least effective mechanisms of appropriating the returns from a...

Introducing a new product, profitability Santos Company is considering introducing a new compact disc player model...

Introducing a new product, profitability Santos Company is considering introducing a new compact disc player model at a price of $105 per Direct materials cost $3,600,000 Direct labor cost $2,400,000 Variable manufacturing overhead $1,200,000 Sales commission 10% of sales Fixed cost $2,000,000 information based on an estimate of 120,000 units of sales annually for the new product: The sales manager expects the introduction of the new model to result in a reduction in sales of the existing model from 300,000...

Hit or Miss Sports is introducing a new product this year. It is a see at...

Hit or Miss Sports is introducing a new product this year. It is a see at night soccer ball. If the balls are a hit, the firm expects to be able to sell 50,000 balls at a price of 60$ each. If the new product is a bust, only 30,000 units can be sold at a price of $55. The variable cost of each ball is $30 and fixed costs are zero. The cost of the manufacturing equipment is $6...

You are the CFO and are considering introducing a new product that will require an initial...

You are the CFO and are considering introducing a new product that will require an initial investment in equipment of $6 million. The equipment will be depreciated straight line over 3 years to a value of zero, and can be sold after 3 years for $500,000. Working capital at each date must be maintained at a level of 10% of the following year’s forecast sales. You estimate production costs at $1.50 /unit and the sales price at $4/unit. Sales forecasts...

Question