Week 7 – Mini Test

(60 minutes)
Sensitivity Analysis with Data Tables

Problem 1 (4.5 points)

On the occasion of summer vacation, a student plans to open a milk tea shop. Before
deciding to open a store, she wants to find out how profits fluctuate with the fluctuations in
unit price (per cup of milk tea) and unit cost of the product. The unit price can range from
VND 16,000.00 to VND 26,000.00 (in VND 1,000.00 increments) and the unit cost can
range from VND 9,000.00 to VND 13,000.00 (in VND 500 increments). Knowing that the
fixed cost is VND 20,000,000.00 and the number of cups of milk tea sold (Demand)
depends on the unit price according to the formula:

Demand = 20000 - 0.5 * Unit Price

Use the two-dimensional sensitivity analysis to answer the following questions:
a) What is the profit if the unit price is 19,000.00 VND and the unit cost is 11,000.00
VND? (1.5 points)
b) How will profit change (amount of increase or decrease of the profit with each increase
in unit cost by VND 500.00 with a constant unit price of VND 21,000.00? (1.5 points)
c) What is the maximum profit the student can earn? (1.5 points)

Problem 2 (3 points)
Assume that at the end of each of the next 40 years, you transfer the same amount in your
retirement fund and earn the same interest rate each year. Knowing that your annual
contribution can change from $5,000 through $25,000 (in $ 5,000 increments) and the rate
of interest varies from 3% through 15% (in 1% increments).

Use the two-dimensional sensitivity analysis to answer the following questions:

a) What is the amount of money you will have at retirement if annual contribution is
$15,000 and the rate of interest is 10%? (1.5 points)

b) What is the maximum amount of money you can have at retirement? (1.5 points)

Problem 3 (2.5 points)

You are borrowing $200,000 and making payments at the end of each month. For an
annual interest rate ranging from 5% through 10% (in 1% increments) and loan durations
could be 10, 15, 20, 25, or 30 years. Determine the total interest paid on the loan? (for each
possibility case).

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Please submit the two following files:

1 The Answer Sheet in Word format with file name is your full name and student ID (e.g. Tran
Van An – 12345678). In the Answer Sheet, you just write your answer for each problem.

2 The Excel file that presents how you can solve the problems. Each problem (together with its
solution) is presented in one separate sheet (e.g. this test has 3 problems, so your Excel file
should have 3 sheets, sheet 1 for problem 1; sheet 2 for problem 2…). The Excel file also
should be named with the above rule.