7. Historical data indicate that a student\'s income for any month of school fro

Question

7. Historical data indicate that a student's income for any month of school from work, parents, scholarships, and loans is consistent with the following probability distribution: PROBABILITY 0.20 0.36 0.30 0.14 INCOME $750 $1150 $1350 Expenses for the same student are believed to be consistent with the following probability distribution: EXPENSE $900 $1000 $1100 $1200 PROBABILITY 0.40 0.25 0.20 0.15 Assuming the student begins the school year with a balance of $1200, use Excel and RSP to simulate 9 months of activity and to predict the position of the student at the end of the year. 8. Redo Problem 7 if expenses are believed to be normally distributed with a mean of $1026 and a standard deviation of $191.36. How does this change the average cash position of the student compared to what you found in Problem 7?

Explanation / Answer

Answer:

And for the generation of expense distribution

Here initially the balance is 1200

So by observing the below table we can say that the answer is 1900

Month U Income Expense Balance at the end of month 1 0.738100256 1150 1100 1250 2 .0219674065 950 900 1300 3 0.721004276 1150 1000 1450 4 0.721004276 1150 1100 1500 5 0.543855233 950 1000 1450 6 0.209865042 950 900 1500 7 0.758422397 1150 1100 1550 8 0.932588776 1350 1200 1700 9 0.361888069 950 900 1750 10 0.343300893 950 900 1800 11 0.946833427 1350 1200 1950 12 0.427857569 950 1000 1900

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