Joe Smith Is a Handyman Who Owns His Own Plumbing

question 42

Essay

Joe Smith is a handyman who owns his own plumbing business.In a typical month,the number of service calls that he gets varies according to the following distribution:
$$\begin{array} { | l | c | c | c | c | c | } \hline \text { Number of Calls } & 15 & 16 & 17 & 18 & 19 \\\hline \text { Probability } & 0.3 & 0.3 & 0.2 & 0.1 & 0.1 \\\hline\end{array}$$
His revenues per service call are normally distributed with a mean of $100 and a standard deviation of $20.His monthly expenses can range between a minimum of $1000 and a maximum of $1500,where all values between the minimum and maximum occur with equal likelihood.
a.Use Crystal Ball to simulate Mr.Smith's monthly profits.Run 1000 replications of the model.
b.What is the average monthly profit?

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Definitions:

Tax Benefit

A deduction, credit, or exemption that reduces taxable income or tax liability, provided to incentivize certain activities or investments.

Operating Lease

A lease agreement for the use of an asset without ownership, typically with shorter terms than a finance lease.

Lessor

An entity or individual who leases or rents out an asset to another, known as the lessee, under a lease agreement.

Lease Period

The specified duration for which a lease agreement is effective, giving the lessee the right to use an asset.