Question: Please show full solution 6. My utility function is u(w)=2[w1] and my current wealth is $1000. I am considering an investment that costs $200 today

Please show full solution 6. My utility function is u(w)=2[w1] and

Please show full solution

6. My utility function is u(w)=2[w1] and my current wealth is $1000. I am considering an investment that costs $200 today and will either pay off $500 or $0 in one year, with respective probabilities p and 1p (i.e. the probability of the $500 payoff is p ). (a) If p=0.6, then what would my expected utility be if I went ahead with the investment? (b) Should I go ahead with the investment if p=0.6 ? (c) What is the smallest value of p for which I should go ahead with the investment

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