Question 1. Coal Town Itd are a small book publishing firm based in Salford. The company is considering launching a new imprint - Ghost Town specialising in ghost and horror stories. The outcome of the project depends on the marketing campaign the firm is planning. There is a 65% probability that the campaign is effective, and a 35% probability that it will not be effective. An effective marketing campaign will generate a cash flow of 500,000, whilst a 'failed' marketing campaign will result in a negative cash flow of (100,000). A firm called Delph Itd. claim they can predict the success or failure of the marketing campaign. Delph Itd for the forecast require a fee of 50,000. When the Market Right Itd forecast says it is an effective marketing campaign, they are correct 95% of the time. A forecast of a 'failing' marketing campaign is correct 90% of the time. Delph have some data from previous firm involvement (anonymised for confidentiality) below. The same Delph predication variables apply: success 95% and failure 90%. Firm A Firm B Firm C Firm D Firm E Firm F Firm G Marketing 45 000 60 000 95 000 50 000 75 000 55 000 80 000 fee Cash flow high 350000 750000 965000 575000 805000 620000 795000 low (50000) (125000) (175000) (110000) (140000) (90000) (130000) Percentage success 60% 70% 55% 65% 50% 80% 75% failure 40% 30% 45% 35% 50% 20% 25% REQUIRED: a) Should the business pay the fee to Delph Itd for a marketing forecast? Show all workings and cell functions using excel. [10 Marks] b) Use Excel and create a spreadsheet to calculate the benefits/costs of Delphs advice to firms using the data in the table. Use and show formula in working out the results. Comment on the data and spreadsheet. [16 marks] c) Discuss and evaluate 3 methods of dealing with risk and uncertainty. [9 marks] TOTAL 35 MARKS