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Sensitivity analysis with data tables in
Excel
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Let's
learn how to do a sensitivity analysis with data tables in Excel.
We have been assigned the task of analyzing the profitabilty of
publishing Nelson Mandela's autobiography. Mr Nelson Mandela gets a
royalty payment of $12 million. The fixed cost of producing the
hardcover autobiography is $2 million. Th variable cost of producing
each book is $4. The publisher makes a net gain of $11 on every unit
produced. The marketing team expects a sale of 1 million copies of the
hard cover version. The fixed cost of producing the paperback version
is $100000. The variable cost will come to $1. The publisher calculates
a net profit of $3 from this product. The paperback will sell 2 million
copies. We need to determine the profit of the publisher when the sales
of the hardcover version will vary between 100000 and 1 million copies
and the ratio of the sales of paperback to hardcover varies between 1
and 3.
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| The Excel training video below shows how this is done. |
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