Question 1

What is the standard deviation of the ending balance? What does the distribution look like now? What should Amanda infer from this?

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Question 2

Suppose again that Amanda will stop investing in the stock market and transfer all of her retirement into a savings account if and when she reaches $500,000.When can she expect to reach this goal under the more conservative investing strategy?

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Question 3

Suppose a 1% increase in market share is worth $10,000 per week to company A.Company A believes that for a cost of $1 million per year it can cut the percentage of unsatisfactory juice cartons in half.Is this worthwhile? (Use the same values of  ,  ,and  as in Question 66.

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Question 4

Next,assume that one of the bidders bids 20% below his or her estimated value,while the other two bidders follow the same strategy as in Question 74.Using 1000 iterations report the expected profit or loss to the conservative bidder.

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Question 5

What is the probability that Amanda will have less than $500,000 in her retirement account after 30 years under the more conservative investing strategy?

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Question 6

Suppose first that all three bidders are aware of the winner's curse so they have decided (independently)to bid 10% below their estimated values.Using 1000 iterations report the expected profit (or loss)to the winner.

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Question 7

Which simulation yields the largest median NPV?

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Question 8

What if the GM satisfaction rate is raised further to 90%.What would the customer NPV be in that case?

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Question 9

Does the answer to Question 72 match your intuition? Explain why or why not.

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Question 10

Suppose GM could raise it customer satisfaction to 85%,to match Toyota's.What would the customer NPV be in that case?

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Question 11

Perform a simulation assuming the plant will be designed to meet the expected demand.What is the NPV in that case?

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Question 12

Using your answers to Questions 69 and 70,and without simulating the model again,estimate how much an extra 5% customer satisfaction is worth to GM.

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Question 13

Next,suppose Amanda's broker thinks the stock market may be too risky and has advised her to diversity by investing some of her money in money market funds and bonds.He estimates that this will lower her expected annual return to 10% per year,but will also lower the standard deviation to 10%.What can she expect to have in her account after thirty years under this investing strategy?

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Question 14

After a year,what will the market share for each of the three companies be? Assume  = 0.10,  = 0.15,and  = 0.20.(Hint: Use the RISKBINOMIAL function to model how many people switch from A,then how many switch from A to B and from A to C.)

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Question 15

Consider a customer whose first car is GM.If profits are discounted at 10% annually,use simulation to estimate the value of this customer to GM over the customer's lifetime.

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Question 16

What is the probability of winning for the conservative bidder?

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Question 17

Suppose that Coke and Pepsi are fighting for the cola market.Each week each person in the market buys one case of Coke or Pepsi.If the person's last purchase was Coke,there is a 0.80 probability that this person's next purchase will be Coke; otherwise,it will be Pepsi.(We are considering only two brands in the market.)Similarly,if the person's last purchase was Pepsi,there is a 0.90 probability that this person's next purchase will be Pepsi; otherwise,it will be Coke.Currently half of all people purchase Coke,and the other half purchase Pepsi.Simulate one year of sales in the cola market and estimate each company's average weekly market share.Do this by assuming that the total market size is fixed at 100 customers.(Hint: Use the RISKBINOMIAL function.)

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Question 18

What is the probability of winning for each bidder in the above scenario?

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