John Smith is the production manager of Elmo's Glue Company. Because of limited capacity, the company can produce only one of two possible products. The two products are: a. A space-age bonding formula that has a 15% probability of making a profit of $2,000,000 for the company and an 85% chance of generating $400,000 in profit. b. A reformulated household glue that has a 100% chance of making a profit of $410,000. John gets a bonus of 30% of the profit from his department. John has the responsiblity to choose between the two prodicts, Assume John is more risk-averse than the top management of Elmo's Glue Company. Required: 1. Compute the expected profit of the space-age bonding formulo. 2-a. Which product is John most likely to choose? A space-age bonding formula A reformulated household glue 2.b. Is that the product Elmo's would prefer? Yes No