From the course: Financial Forecasting with Analytics Essential Training
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Stress testing the results - Microsoft Excel Tutorial
From the course: Financial Forecasting with Analytics Essential Training
Stress testing the results
- [Instructor] Now that we've built our hedonic pricing model, we want to go through and we want to stress test it to determine how different changes in our business practices will impact our sales. In particular, Diane is interested in looking at how a change in price and by extension a change in the net promoter score will impact sales at the firm. Now as you can see, we've built a model which shows us that given these particular inputs, our expected output for sales is $751.53 million. So I'm going to create a little chart down here that shows us what our sales are under a variety of scenarios. So our base case is 751.5 million. Now, Diane is recommending that the firm lower their price. Doing that she believes will raise the net promoter score from 0.001 to 0.04. As we can see with the bolded number at the top, doing that results in the firm's sales rising to $816.8 million. If we lower the price, that's the expected…
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