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How can I solve this problem in an excel spreadsheet? Manuela is the manager of an office supply store. The store can have weak demand,

How can I solve this problem in an excel spreadsheet?

Manuela is the manager of an office supply store. The store can have weak demand, with a probability of 0.2, and strong demand, with a probability of 0.8. Moreover, the store's profit will depend on Manuela's managerial effort, as it is shown in the following table. From Manuela's perspective, each effort level comes with a cost. This cost is 2 for low effort, 10 for medium, and 32 for high. Both Manuela and the owner are risk neutral.

Weak Demand Strong Demand
Low Effort 40 60
Medium Effort 60 100
High Effort 100 140
  1. Fill in the expected payoffs to both parties if Manuela is compensated with a fixed salary of 20. Which effort level does Manuela choose?
  2. Fill in the expected payoffs to both parties if Manuela is compensated with a profit-sharing contract providing her with 50% of the profits (and the owner gets the other 50%). Which effort level does Manuela choose?
  3. Now suppose that Manuela's contract provides her with a base salary of 30 and 100% of any profits exceeding 100. Which effort level does she choose?
  4. Which of the two contracts in parts a., b., and c. would Manuela prefer? Which would the owner prefer?

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