The manager’s utility function for profit is U(p) = 10 ln(p), where p is the dollar amount of profit. The manager is considering a risky decision with the four possible profit outcomes shown below. The manager makes the following subjective assessments about the probability of each profit outcome:

probability	Profit outcome Project A	Profit outcome Project B
0.05	$5,000	$14,000
0.10	$10,000	$14,000
0.35	$15,000	$14,000
0.50	$20,000	$14,000

What is the expected profit of Project A and Project B?

What is the manager’s expected utility of profit for Project A and Project B?

If this manager is maximizing expected utility, which project will be chosen?

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