4. An advertising firm is putting forth a proposal to McDonald's in an attempt to win the rights to run a new advertising campaign. In an attempt to persuade McDonald's executives, it offers the following projections relating to possible increase in profits. Profits Increase $18,000,000 $10,000,000 $4,000,000 No Change -$5,000,000 Probability 0.2 0.4 0.25 0.05 The advertising agency plans to charge 8.2 million dollars for its service. What is the expected value of the advertising campaign to McDonald's? Should McDonald's executives hire the company? 0.1 5. At a horse race you decide to place a $100 bet on a prize horse named Chebychev. The bet is structured so that you will win $575 if the horse wins, $250 if Chebychev places 2nd, and $175 if he finishes in 3'd place. There are 8 horses in the race. Assume that Chebychev is equally likely to finish in any of the 8 final positions. Aside from your need to feed your gambling addiction, was the bet a wise business move? What is the expected value to you? What is the expected value to the horse track? PARTA Question 1: Jenson Lid was established in 2015. The following balances as at 31 January 2019 have been extracted from the books of account after the trading account has been compiled: RE 000 E000 Cash at bank and in hand 20 Distribution costs 15 Dividend paid (on preference shares) 6 Administration expenses 65 Furniture and equipment: At cost 60 Accumulated depreciation at 1.2.2018 Gross profit for the year Ordinary share capital (shares of El each) 100 Preference shares (cumulative 15% of 1 shares) 40 Profit and foss account (at 1.2.2018) 50 Share premium account 20 Stocks at 31.01.2019 130 Trade creditors 25 Trade debtors 135 36 150 421 421 Additional information a Furniture and equipment is depreciated at an annual rate of 10 per cent of cost and it is all charged against administrative expenses b. Corporation tax owing at 31 January 2019 is estimated to be E24,000 C. A dividend of 20 per ordinary share is proposed d. All the authorized share capital has been issued and is fully paid Required: Prepare Jenson Lid's profit and loss account for the year to 31 January 2019 and a balance sheet as at 31 January 2019, (20 marks)