Question

Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web-site construction is estimated to be $150,000. Variable processing costs are estimated to be $7 per book. The publisher plans to sell single-user access to the book for $49. 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 = 4,000 - 6p, where p is the price of the e-book. (a) Build a spreadsheet model to calculate the profit/loss for a given demand. What is the demand? (b) Use Goal Seek to calculate the price that results in breakeven. If required, round your answer to two decimal places. $ (c) Use a data table that varies price from $50 to $400 in increments of $25 to find the price that maximizes profit. If Eastman sells the single-user access to the electronic book at a price of $ , it will earn a maximum profit of $ .

Answer 1