In the solution guide provided - it says to use the solver function to maximize
ID: 2401774 • Letter: I
Question
In the solution guide provided - it says to use the solver function to maximize C6 by changing C32. But when I do that it says cells do not converge and I dont get the right answer. Can somebody tell me where I'm going wrong ?
Figure 10-9 Income Statement at Optimum Selling Price ABC COMPANY Income Statement for the Year Ended Dec. 31, 20x2 for per share and unit selling price Dollar values are in $ 5Less: Cost of Goods Sold (COGS) &Gross; Profits $1,450.8 eprecistion Expense $75.0 $675.0 $775.8 Fixed Expenses Net Operating Income ?Other Income 15 Earnings before Interest and Taxes (EBIT) $795.8 Interest Epense Interest on Short-Term Notes 19 Total Interest Expense Earnings before Taxes (EBT) $735.8 21 Less: Taxes 22 Current 2 Total Taxes (rate-40%) $441.5 Earnings after Taxes (EAT) 26 Less: Preferred Stock Dividends 27 Net Earnings Available for Common Stockholders 53.46 Optimum selling price Entry in Cell 833 ls Unit Selling Price Number of Units Sold 44.66% New break-even point (units and $ Break-Even Point, units for optimum sellingprice-- s Break-Even Point, sales in S thousand for Forecasting the Number of Units Sold from the Unit Seling Price 40 130,000 120,000 ? 110,000 784 29 100,000 90,000 80,000 70,000 5360,000 $20 $22 $24 $26 $28 $30 SELLING PRICE, SUNITExplanation / Answer
This normally means you are missing a constraint (or multiple constraints) that is allowing the objective to go to positive or negative infinity.
For example:
Set A1 as a variables
Set A2 as = A1 * 2
Set A2 as the objective to maximize
When you run this, you should get that same error message, since A1 is not restricted and A2 can potentially become positive infinity.
.
Please check your constraints and ensure the objective is not being allowed to range from positive to negative infinity. You can also run a quick test by applying a constraint directly to your objective cell which should also resolve the error but is not generally good modeling practice unless you have known minimum or maximum value for it to be