UNCERTAINITY QUESTION

Please help me in the following question, I have no idea of how to do it:

A theatre has a seating capacity of 500 people and is considering engaging Henry Lenny for a performance for one night only. The fee that would be charged by Henry Lenny would be $10,000. If the theater engages Henry Lenny, then this sum is payable regardless of the size of the audience.

Based on past experience of events of this type, the price of the ticket would be $25 per person. The size of the audience for this event is uncertain, but based on past experience it is expected to be as follows.

300 people – probability 50%
400 people – probability 30%
500 people – probability 20%

In addition to the sa le of the tickets, it can be expected that members of the audience will also purchase confectionery and drinks and both prior to the performance and during the interval. The contribution that this would yield is unclear, but has been estimated as follows.

Contribution form confectionery and drinks sales:

contribution of $3 per person – probability 30%
contribution of $5 per person – probability of 50%
contribution of $10 per person – probability of 20%

Required:

(a) Prepare a two way table to show the profit value that could occur from deciding to engage Henry Lenny for the performance (5 marks) . How on earth do we draw a two way table? Please help

(b) Using the probabilities provided and your answer to (a) above, show how the two way data table can be used by the theater management to evaluate the financial risks of the performance, including the probability of making a profit (6 marks)

(c) Using expected values as the basis of your decision, advise the theater management whether it is financially worthwhile to engage Henry Lenny for the performance (5 marks)

Total (16 marks)