Using the data in the decision tree, calculate the net gain for the marketing campaign - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Question 1
Using the data in the decision tree, calculate the net gain for the marketing campaign. State your answer to two decimal places. You are advised to show your working... show full transcript
Worked Solution & Example Answer:Using the data in the decision tree, calculate the net gain for the marketing campaign - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Step 1
Calculate the expected value of the marketing campaign
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Answer
To find the expected value, multiply the probability by the potential outcomes. Given that the marketing campaign yields a 60% success rate on a value of £3 million, the expected value is calculated as:
0.6×3,000,000=£1,800,000
Step 2
Subtract the initial cost of the marketing campaign
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Answer
The initial cost of the marketing campaign is £20,000. Therefore, to find the net gain, we subtract this cost from the expected value:
£1,800,000−£20,000=£1,780,000
Step 3
Final calculation of the net gain
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Answer
To present the final net gain correctly, we provide the final answer rounded to two decimal places:
The net gain for Tended Ltd from the marketing campaign is: £1,780,000.
