USF Finance Managerial Analysis Working Area Questions

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Complete question 3 of the form, and question 4 of the form and use the model to make the regression equation

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Managerial Analys Summer 20 1. Carrie's Corporate Catering ("Triple-C") provides breakfast, lunch, or dinner for m of $8 (MC=$8.00) per attendee. Because MC is constant, average variable cost (AVC also equal to average total cost (AC). Assume the demand for each event is identica charged per attendee. Assume, initially, Triple-C charges a single price per attendee for each event. Use this information to answer the questions (a. through d.) below. NOTE: For some of these questions, you may want to do the work outside of Excel a. With a single price, how much will Triple-C charge per attendee in order to maximize profit, and NOTE: Cost-plus pricing here is consistent with marginal-cost pricing, so follow the MR=MC appr Attendees per event (Round to nearest whole number): Profit-maximizing price per attendee: b. With a single price, what is Triple-C's markup and profit margin per attendee? (2 pts.) c. With a single price, what is Triple-C's profit per event? (2 pts.) Note: Enter a formula--using information above--to calculate profit. Suppose Triple-C is considering an alternative pricing scheme, in which the company would char $44 per attendee for the next 10 attendees, $32 per attendee for the next 10 attendees, and $8 for a In other words, Triple-C would engage in block pricing, a form of second-degree price discriminat d. Under this pricing scheme, how many attendees would be at each event and what would be Trip Attendees per event: Profit per event: Managerial Analysis Final Assignment Summer 2021 (Sec. 791) unch, or dinner for meetings and events held by local businesses and organizations. For eac e variable cost (AVC) is equal to $8, as well, and because Triple-C engages in costach event is identical, given by the expression, P = 68 - 1.2Q, where Q is the number of attend r each event. rk outside of Excel and just put your answer in the text box provided. to maximize profit, and how many people will attend each event (attendees per event) at that price? (4 pts.) follow the MR=MC approach. ndee? (2 pts.) attendees, and $8 for all remaining attendees (i.e. set price equal to marginal cost for each attendee after 30 izations. For each event, Triple-C incurs marginal cost es in cost-plus pricing (i.e. prices for the long run), AVC is the number of attendees for each event, and P is the price nt) at that price? (4 pts.) or each attendee after 30 in total). Managerial Analysis Final Assign 2. You are a manager in a large hotel chain that is about to open a hotel in a new cit customers that will stay at this hotel: tourists and business travelers. You can sepa third-degree price discrimination. To help you determine the profit-maximizing price 50 other cities (these data can be found below). Based on prior research, you know an exponential demand function, of the form: Q = APn, where Q is output (number o demand. Part I: For each group of customers, run a regression to estimate "n," the price elas NOTE: Since this is an exponential function, you will have to first transform the dat LN(Q) = LN(A) + nLN(P). In this form, the estimated coefficient for the log of P (i.e. "n") will be, in fact, your es you should obtain a negative value from your regression and not omit the minus sig NOTE: Round each of your estimated coefficients (i.e. regression results) to three d Part II: Use the results of your regressions to answer the question (determining the HINT: Look at Slide 9 of the lecture notes. NOTE: Assume marginal cost for each nightly stay is $25. a. Based on your regression results, enter a formula in the respective boxes below to calculate th NOTE: Round your answers to the nearest dollar. Tourists: Business Travelers: DATA: Tourists Price (per night) 207 226 165 183 171 176 193 205 161 188 161 180 187 204 192 217 201 229 184 168 164 210 164 195 200 217 214 226 218 227 224 166 203 211 179 197 205 176 219 166 185 180 206 192 163 163 194 162 Nightly Stays per Month (000s) 189 167 242 222 234 233 200 187 255 215 249 228 209 193 211 173 191 164 217 236 244 186 250 205 198 178 182 173 175 173 171 242 191 185 226 198 192 229 179 247 214 219 185 210 252 252 204 256 Business Travelers Price (per night) 229 243 221 257 261 275 240 226 228 263 257 271 288 235 250 243 247 257 264 266 257 265 239 249 221 249 255 289 241 289 231 281 255 240 242 244 223 285 231 270 253 276 259 287 275 269 227 266 222 200 177 196 228 225 alysis Final Assignment (Summer 2021, Sec. 791) n a hotel in a new city. You have been asked to determine the nightly rates that should be ch velers. You can separate (and so identify) members of each group based on advanced booki maximizing price for each group, you use a sample of data you have on these same grou research, you know that demand for both groups exhibit constant elasticity. Therefore, in u is output (number of nightly stays per month), P is price per night, A is a constant, and "n" i ate "n," the price elasticity of demand for that group. (4 pts.) rst transform the data into natural logs in order to estimate a linear regression of the form: A) + nLN(P). will be, in fact, your estimate of the price elasticity of demand for that group. ALSO, because " ot omit the minus sign as you do your calculations. on results) to three decimal places. ion (determining the profit-maximizing price for each group). xes below to calculate the profit-maximizing price for each group of customers. (6 pts.) Business Travelers Nightly Stays per Month (000s) 25 24 26 23 22 21 24 27 25 22 22 21 19 25 24 23 24 22 21 21 22 22 25 24 27 24 23 20 24 20 26 21 22 24 24 23 26 21 25 22 22 21 22 19 21 22 25 22 26 26 tes that should be charged to the two distinct groups of d on advanced booking. Therefore, you plan to implement e on these same groups of customers for the hotel chain in city. Therefore, in using the data below, you will assume a constant, and "n" is the (constant) price elasticity of ssion of the form: up. ALSO, because "n" is the price elasticity of demand, Managerial Analysis Final Ass 3. You have just become the manager of a private golf club, and have been asked to previously managed public golf courses and know from experience there are two ty (for four years) data on the number of rounds each golfer played that year as well as this problem, in which you have already divided the data into two equal groups, one "occasional" golfers (those without a subscription). Along with the annual number Part I: For each group of 100 golfers, run a regression to estimate a simple demand explanatory variable) is the price per round, and "a" and "b" are the parameters to b Part II: Use the results of your regressions to answer the questions below. NOTE: Assume, for all questions, that the club incurs a constant marginal cost (and a. Based on your regression results, write the general expression for the respective demand equa NOTE: Round the intercept term to the nearest whole number and the coefficient for P to two dec NOTE: Refer to these rounded values throughout the problem. Serious Golfer Demand: Occasional Golfer Demand: Serious Golfers Only: Suppose you want to consider what the club's profit would b b. How much would the club charge for each round of golf? (2 pts.) c. Enter a formula to calculate the annual membership (entry) fee charged to each golfer. (2 pts.) (NOTE: Round to nearest whole dollar.) d. You estimate there are 150 "serious" golfers at your new club. Enter a formula to calculate the NOTE: For purposes of this question, assume there are no fixed costs. Round to the nearest doll Attracting Both Types of Golfers: Now consider what the club's profit would be if yo e. How much would the club charge for each round of golf? (2 pts.) NOTE: Round answer to the nearest dollar. f. Enter a formula to calculate the annual membership (entry) fee charged to each golfer. (2 pts.) (NOTE: Round to nearest dollar.) g. You project the club could attract 1350 "occasional" golfers, in addition to the 150 "serious" go Enter a formula to calculate the club's profit in this case. (2 pts.) NOTE: Again, assume there are no fixed costs. Round to nearest dollar. DATA: Serious Golfers Occasional Golfers Annual Rounds (18 holes each) Annual Rounds (18 holes each) 91 89 92 92 90 88 91 90 90 94 93 90 89 93 94 89 91 94 90 88 86 89 90 89 86 90 86 87 89 86 91 90 86 87 Price 22 22 22 22 23 23 22 22 23 23 22 23 23 22 23 23 23 22 19 20 19 19 19 20 19 20 19 19 19 20 19 19 20 20 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 90 87 90 89 91 82 84 87 82 87 85 84 81 87 82 85 83 82 82 86 87 81 84 81 86 85 85 86 81 82 83 84 81 87 81 81 82 79 82 80 84 78 82 82 82 78 79 84 83 80 79 80 19 20 19 19 20 17 18 18 18 17 17 17 17 18 17 17 18 17 18 18 17 18 18 17 17 17 18 18 18 17 17 18 17 17 17 17 14 15 15 14 14 15 15 14 14 15 15 14 14 14 15 14 24.00 24.00 24.00 24.00 24.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 81 83 81 83 80 79 78 79 79 81 81 79 83 84 14 14 15 14 15 15 15 15 15 14 14 14 14 15 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 Analysis Final Assignment (Summer 2021, Sec. 791) d have been asked to come up with an annual membership (entry) fee as well as a price to ch ence there are two types of golfers: "serious" and "occasional." In fact, you have annual sur d that year as well as whether the golfer had a subscription to the publication, "Golfer's Dige wo equal groups, one consisting of 100 "serious" golfers (those with a subscription to "Golfe h the annual number of rounds for each golfer, you also have the price of a round of golf corr ate a simple demand equation (i.e. Q = a - bP), where Q (the dependent variable) represents th e the parameters to be estimated by the regression. ions below. nt marginal cost (and therefore, average variable cost) of $10 for each round of golf. respective demand equation (4 pts.) efficient for P to two decimal places (e.g. Q = 62 - 1.34P). club's profit would be if you limited membership to "serious" golfers. d to each golfer. (2 pts.) formula to calculate the club's profit from limiting membership to just this group of golfers. (2 pts.) ound to the nearest dollar. s profit would be if you priced such that you could attract both "serious" and "occasional" go to each golfer. (2 pts.) n to the 150 "serious" golfers who are already members. s well as a price to charge for each round (18 holes) of golf. You have you have annual survey data from your previous job in which you collected cation, "Golfer's Digest." A sample of the data can be found at the bottom of ubscription to "Golfer's Digest"), and the other group consisting of 100 f a round of golf corresponding to the year when the round was played. variable) represents the number of annual rounds of golf, P (the only ound of golf. golfers. (2 pts.) " and "occasional" golfers. llected ttom of Managerial Analysis Final Assignment 4. A company has two divisions. The first produces an operating system for mobile smartphone. Of course, the company's smartphone runs on its own operating syst the operating-system division is $85, while marginal cost in the smartphone division addition, the price elasticity of demand for this company's smartphone is a constan 70,000P-1.15., where P is the price per smartphone, and Q is the quantity of smartpho For this entire problem, assume pricing is conducted over the long run (AC = AVC: In answering the questions below, you will consider two scenarios: Part I: No external market for the operating system (the operating-system chips are Part II: The operating system has its own external market, which is given by the inv chips (in millions). NOTE: Use marginal-cost pricing (MR=MC) to determine the operating-system divis cost-plus pricing to determine the price of the company's smartphone. Part I (No External Market for the Operating System): a. What is the profit-maximizing price of a smartphone? (2 pts.) NOTE: Round to nearest dollar. b. Enter the formula to calculate the profit-maximizing quantity of smartphones (in millions). (2 pt NOTE: Round to two decimal places. c. What is the company's profit (both divisions combined), in millions? (2 pts.) NOTE: Round to nearest whole number (in millions). Part II (External Market for the Operating System): a. Calculate the profit-maximizing quantity (in millions) and price of operating-system chips. (4 pt NOTE: Enter formulas in the respective boxes below. Round both to two decimal places. Profit-Maximizing Quantity: Profit-Maximizing Price: b. Enter a formula to calculate the profit (in millions) of the operating-system division. (2 pts.) NOTE: Round to nearest whole number (in millions). c. Calculate the profit-maximizing price and quantity (in millions) of the company's smarthpones. NOTE: Calculate each to two decimal places. Profit-Maximizing Price: Profit-Maximizing Quantity: d. What is the company's overall profit (both divisions combined)--in millions? (2 pts.) NOTE: Round to nearest whole number (in millions). Final Assignment (Summer 2021, Sec. 791) ng system for mobile devices, such as smartphones. The other division manufacturers and m s own operating system (NOTE: Each smartphone contains one operating-system chip). Mar smartphone division--excluding the cost of the chip--is a constant $25 (thus, in this problem rtphone is a constant -1.15 at every price level, with demand for the smartphone given by the quantity of smartphones demanded, in millions. ong run (AC = AVC: all costs are variable). system chips are strictly inputs to the company's smartphone division). h is given by the inverse demand function: P = 164 - 1.30Q, where P is the price per chip, and -system division's profit-maximizing quantity and price (when there is an external mar phone. hones (in millions). (2 pts.) ating-system chips. (4 pts.) decimal places. em division. (2 pts.) ompany's smarthpones. (4 pts.) manufacturers and markets its own system chip). Marginal cost of a chip in thus, in this problem, AVC = MC). In rtphone given by the function: Q= he price per chip, and Q is the quantity of ere is an external market), but always use
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Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.

Managerial Analys
Summer 20

1. Carrie's Corporate Catering ("Triple-C") provides breakfast, lunch, or dinner for m
of $8 (MC=$8.00) per attendee. Because MC is constant, average variable cost (AVC
also equal to average total cost (AC). Assume the demand for each event is identica
charged per attendee.
Assume, initially, Triple-C charges a single price per attendee for each event.
Use this information to answer the questions (a. through d.) below.
NOTE: For some of these questions, you may want to do the work outside of Excel

a. With a single price, how much will Triple-C charge per attendee in order to maximize profit, and
NOTE: Cost-plus pricing here is consistent with marginal-cost pricing, so follow the MR=MC appr
Attendees per event
(Round to nearest whole
number):
Profit-maximizing price
per attendee:

b. With a single price, what is Triple-C's markup and profit margin per attendee? (2 pts.)

c. With a single price, what is Triple-C's profit per event? (2 pts.)
Note: Enter a formula--using information above--to calculate profit.

Suppose Triple-C is considering an alternative pricing scheme, in which the company would char
$44 per attendee for the next 10 attendees, $32 per attendee for the next 10 attendees, and $8 for a
In other words, Triple-C would engage in block pricing, a form of second-degree price discriminat

d. Under this pricing scheme, how many attendees would be at each event and what would be Trip
Attendees per event:

Profit per event:

Managerial Analysis Final Assignment
Summer 2021 (Sec. 791)

unch, or dinner for meetings and events held by local businesses and organizations. For eac
e variable cost (AVC) is equal to $8, as well, and because Triple-C engages in costach event is identical, given by the expression, P = 68 - 1.2Q, where Q is the number of attend

r each event.

rk outside of Excel and just put your answer in the text box provided.

to maximize profit, and how many people will attend each event (attendees per event) at that price? (4 pts.)
follow the MR=MC approach.

ndee? (2 pts.)

attendees, and $8 for all remaining attendees (i.e. set price equal to marginal cost for each attendee after 30

izations. For each event, Triple-C incurs marginal cost
es in cost-plus pricing (i.e. prices for the long run), AVC is
the number of attendees for each event, and P is the price

nt) at that price? (4 pts.)

or each attendee after 30 in total).

Managerial Analysis Final Assign

2. You are a manager in a large hotel chain that is about to open a hotel in a new cit
customers that will stay at this hotel: tourists and business travelers. You can sepa
third-degree price discrimination. To help you determine the profit-maximizing price
50 other cities (these data can be found below). Based on prior research, you know
an exponential demand function, of the form: Q = APn, where Q is output (number o
demand.

Part I: For each group of customers, run a regression to estimate "n," the price elas
NOTE: Since this is an exponential function, you will have to first transform the dat
LN(Q) = LN(A) + nLN(P).

In this form, the estimated coefficient for the log of P (i.e. "n") will be, in fact, your es
you should obtain a negative value from your regression and not omit the minus sig
NOTE: Round each of your estimated coefficients (i.e. regression results) to three d

Part II: Use the results of your regressions to answer the question (determining the
HINT: Look at Slide 9 of the lecture notes.
NOTE: Assume marginal cost for each nightly stay is $25.

a. Based on your regression results, enter a formula in the respective boxes below to calculate th
NOTE: Round your answers to the nearest dollar.
Tourists:

Business Travelers:

DATA:

Tourists
Price (per night)
207
226
165
183
171
176
193
205
161
188
161
180
187
204
192
217
201
229
184
168
164
210
164
195
200
217
214
226
218
227
224
166
203
211
179
197
205
176
219
166
185
180
206
192
163
163
194
162

Nightly Stays per Month
(000s)
189
167
242
222
234
233
200
187
255
215
249
228
209
193
211
173
191
164
217
236
244
186
250
205
198
178
182
173
175
173
171
242
191
185
226
198
192
229
179
247
214
219
185
210
252
252
204
256

Business Travelers
Price (per night)
229
243
221
257
261
275
240
226
228
263
257
271
288
235
250
243
247
257
264
266
257
265
239
249
221
249
255
289
241
289
231
281
255
240
242
244
223
285
231
270
253
276
259
287
275
269
227
266

222
200

177
196

228
225

alysis Final Assignment (Summer 2021, Sec. 791)

n a hotel in a new city. You have been asked to determine the nightly rates that should be ch
velers. You can separate (and so identify) members of each group based on advanced booki
maximizing price for each group, you use a sample of data you have on these same grou
research, you know that demand for both groups exhibit constant elasticity. Therefore, in u
is output (number of nightly stays per month), P is price per night, A is a constant, and "n" i

ate "n," the price elasticity of demand for that group. (4 pts.)
rst transform the data into natural logs in order to estimate a linear regression of the form:

A) + nLN(P).

will be, in fact, your estimate of the price elasticity of demand for that group. ALSO, because "
ot omit the minus sign as you do your calculations.
on results) to three decimal places.

ion (determining the profit-maximizing price for each group).

xes below to calculate the profit-maximizing price for each group of customers. (6 pts.)

Business Travelers
Nightly Stays per Month
(000s)
25
24
26
23
22
21
24
27
25
22
22
21
19
25
24
23
24
22
21
21
22
22
25
24
27
24
23
20
24
20
26
21
22
24
24
23
26
21
25
22
22
21
22
19
21
22
25
22

26
26

tes that should be charged to the two distinct groups of
d on advanced booking. Therefore, you plan to implement
e on these same groups of customers for the hotel chain in
city. Therefore, in using the data below, you will assume
a constant, and "n" is the (constant) price elasticity of

ssion of the form:

up. ALSO, because "n" is the price elasticity of demand,

SUMMARY OUTPUT
Regression Statistics
Multiple R 0,886829
R Square 0,786466
Adjusted R Square
0,784287
Standard Error
2,019335
Observations
100
ANOVA
df
Regression
Residual
Total

SS
MS
F
Significance F
1 1471,824 1471,824 360,9437 1,26E-34
98 399,6158 4,077712
99 1871,44

Coefficients
Standard Error t Stat
P-value Lower 95%Upper 95%Lower 95.0%
Upper 95.0%
Intercept
130,5616 2,39826 54,44013 4,68E-75 125,8023 135,3208 125,8023 135,3208
X Variable 1 -1,78325 0,093863 -18,9985 1,26E-34 -1,96952 -1,59698 -1,96952 -1,59698

SUMMARY OUTPUT
Regression Statistics
Multiple R 0,981239
R Square
0,96283
Adjusted R Square
0,962451
Standard Error
0,554973
Observations
100
ANOVA
df
Regression
Residual
Total

SS
MS
F
Significance F
1 781,8564 781,8564 2538,532 7,12E-72
98 30,18356 0,307996
99
812,04

Coefficients
Standard Error t Stat
P-value L...


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