Jane Doe, an extremely popular musician, agrees to perform a concert at a local universitys homecoming weekend. Jane enters into a contract with the university to perform for $100,000. In addition, as part of the contract, a performance bonus of $10,000 will be paid if Jane can spend time with the university students in a mentoring capacity during breakfast and lunch the next day. The performance bonus will be paid fully if Jane can do both breakfast and lunch. The bonus decreases by $5,000 for each event missed. Jane regularly performs in many similar types of contracts that have performance bonuses. Jane estimates, given the constraints of having to get up early for the breakfast schedule given her exhausting even the night before, that there is a 65% probability that she will attend the breakfast only and a 30% probability that she will attend both the breakfast and lunch as well and a 5% probability that she might not attend either function the next day.

Required:

1. Determine the transaction price that Jane Doe should compute for this agreement using the expected value method.
2. Assume that Jane Doe has concluded that even though it is most important to connect with students at the university, she probably would do best to rest up for her next big contract elsewhere. Assuming that she now believes that the probability of not attending both is 80% and the probability of attending both is 20%, determines the transaction price using the most likely method.