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Amy has a utility function U = 4P, where P represents the payment. Amy also has an investment opportunity that will pay $49 with probability 0.2 and $100 with probability 0.8. What is the certainty equivalent of this opportunity? 89.73 80.27 84.48 85.18 88.36

Amy has a utility function U = 4P, where P represents the payment. Amy also has an investment opportunity that will pay $49 with probability 0.2 and $100 with probability 0.8. What is the certainty equivalent of this opportunity? 89.73 80.27 84.48 85.18 88.36

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question 41 Amy has a utility function U= 4P, where P represents the payment. Amy also has an investment opportunity that will pay $49 with probability 0.2 and $100 with probability 0.8. What is the certainty equivalent of this opportunity? 89.73 80.27 84.48 85.18 88.36
Transcribed Image Text:Question 41 Amy has a utility function U= 4P, where P represents the payment. Amy also has an investment opportunity that will pay $49 with probability 0.2 and $100 with probability 0.8. What is the certainty equivalent of this opportunity? 89.73 80.27 84.48 85.18 88.36
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