Samantha's utility function isU(Y) =Y^0.5. She tries to maximize her expected utility. She owns a car for business that she will have to replace if it is stolen. If her car is notstolen, her net income will be $122,500. If the car is stolen, her net income will be reduced by the car'sreplacement cost of $20,100. The probability that the car will be stolen is 20%. Use Excel to answer the following questions.

The insurance company is willing to offer a rebate to Samantha if she purchases the antitheft device. However, the company would need to incur a monitoring cost to insure that Samantha installs and retains the device (to avoid moral hazard). If the price of the device is $2,000, determine the largest monitoring cost the company would be willing to incur while still offering a large enough rebate to cover the cost of the device? How would your answer change if the price of the anti-theft device were $2,100?