Students should work individually on the Mid-Term: Students are encouraged to talk and show each other tricks in Excel, if helpful, but files should not be shared or copied, and all students should be able to replicate analysis they used for the Mid-Term. Instructions: For each problem, first read the background in the problem and then refer to the related tab in “Mid-Term.xlsx” for the data to be used. Each student’s successfully completed Mid-Term will include: (1) a Word doc with each section of the problem (e.g., Problem 1, part a, sub-part i) answered clearly and straightforwardly, including brief explanations in sentence form, charts pasted into the doc, references to the XLSX file, etc. (Please type answers and paste data/charts/etc. into this DOC and save as with “- [Last Name]” at the end). (2) an Excel file showing the work, formulas, Pivot tables, charts, etc. used to calculate and analyze the data. (Please also use the original XLSX, manipulating data, adding tabs, etc. and save as with “- [Last Name]” at the end). PART I – Problems: Answer in the same format (DOC/XLSX) used in the homework assignments. 1. (100 Points) Revenue Forecasting Application – Show work on TAB 1 (or add “1” at the beginning of other tabs used to answer this questions) on XLSX: As we discussed in class and as Silver notes in his book, a prediction of percentage chance of something happening is not the same as saying that thing will actually happen. Suppose, for example, that a local government would expect $100 million in tax revenue for its general fund in a “good” economy and $60 million during a “bad” economy. Suppose that every fiscal year there is a 15% chance (independent probability unrelated to the previous year) of a bad economy and an 85% chance of a “good” economy. Also suppose that the government cannot know whether it was a “good” or “bad” economy until the end of the fiscal year, well after the budget has been set. a. Possible Outcomes: In this example, how many possible outcomes are there for each fiscal year? What are these outcomes? Are they mutually exclusive? Are they collectively exhaustive? Answer: There are two options that government can foresee and 2 outcomes that can really happen. Taking it into consideration we can conclude that total amount of possible outcomes is 4 b. Decision Tree: Create a decision tree to illustrate the possible outcomes of 4 fiscal years. You should show (i) the independent probability of each event (chance node), based on the information in the question, and (ii) the final amount of tax revenue after 4 years given these possible 4-trial outcomes (end nodes), but do not need to calculate the full probability of each 4-trial outcome at this point. Answer: (Paste Graphic Here or Create it Using the “Insert” Ribbon in Word and Shapes) c. Calculating the Probability of Outcomes over Multiple Trials: Determine the probability that this local government will face “good” economies 0, 1, 2, 3,.