master tech is a new software company that develops and markets productivity software for

government applications. The following is used when developing a balance sheet:

Gross profit = Net sales - Cost of sales

net operating profit = Gross profit - administrative expenses - sales expenses

sales costs = fixed costs + variable costs

Net profit before taxes = Net operating profit - interest

Net income = Net profit before taxes - Taxes

Net sales are evenly distributed between $ 600,000 and $ 1,200,000. The cost

sales are normally distributed, averaging $ 540,000 and a standard deviation of $ 20,000. Expenses

sales have a fixed item that is evenly distributed between $ 75,000 and $ 110,000. The

variable is estimated at 7% of net sales. Administrative costs follow.

Develop a net income risk study

using Crystal Ball and make a written report to the administration. The study must

includes the following

a) What is the expected net profit?

b) with a probability of 90% what is the lowest price that the net profit can get? Who

is the risk (in $)?

c) perform the sensitivity analysis to determine the contribution of each risk factor

to net profit. Comment on the size and sign (+ h -) of each risk factor

affects net profit.

d) What is the probability that MasterTech will have zero net profit

normal distribution, with an average of $ 50,000 and a standard deviation of $ 3,500. Interest costs are $ 10,000. THE

company is taxed at a rate of 50%.