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Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed...

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 $170,000. Variable processing costs are estimated to be $5 per book. The publisher plans to sell single-user access to the book for $45.

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 $ .

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jeff jeffy answered 1 year ago
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