An Investment firm offers free financial planning seminars at major hotels for groups of 30 individuals. Each seminar costs them $4,000 and the average first-year commission for each new enrollment is $6,000
The firm estimates that for each individual attending the seminar, there is a 0.05 probability that he/she will enroll.
a. Determine the equation for computing the profit per seminar, given values of the relevant parameters.
b. Construct a spreadsheet simulation model to analyze the profitability of the seminars. Would you recommend the investment firm to continue running the seminars?
a. Profit = (New Enrollment × 6000) – 4000.
b. The expected profit from a seminar is $5,000. Hence, the investment firm can continue conducting seminars.
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