Question: You are considering buying insurance for your new laptop computer
You are considering buying insurance for your new laptop computer, which you have recently bought for $1,500. The insurance premium for three years is $80. Over the three-year period there is an 8% chance that your laptop computer will require work worth $400, a 3% chance that it will require work worth $800, and a 2% chance that it will completely break down with a scrap value of $100. Should you buy the insurance? (Assume risk neutrality.)
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