This problem asks you to construct a simple simulation model. If you do not own simulati...

This problem asks you to construct a simple simulation model. If you do not own simulation software, you can download to your computer a free, full-strength version of Crystal Ball for a 15-day trial. Go to oracle.com/crystalball. (For detailed instructions, see WEBSITES at the end of this chapter.)

a. Problem 7 above asked you to extend the forecast for R&E Supplies contained in Table 3.5 through 2016. Using the same spreadsheet, simulate R&E Supplies’ external funding requirements in 2016 under the following assumptions.

i. Represent the growth rate in net sales as a triangular distribution with a mean of 30 percent and a range 25 percent to 35 percent.

ii.Represent the interest rate as a uniform distribution varying from 9 percent to 11 percent. iii.Represent the tax rate as a lognormal distribution with a mean of 45 percent and a standard deviation of 2 percent.

b. If the treasurer wants to be 95 percent certain of raising enough money in 2016, how much should he raise? (Grab the triangle below the frequency chart on the right and move it to the left until 95.00 appears in the “Certainty” window.)