Hudson Has Two Job Offers When He Graduates from College

Multiple Choice

Hudson has two job offers when he graduates from college. Hudson views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $45,000. The second offer is at a fixed salary of $25,000 plus a possible bonus of $40,000. Hudson believes that he has a 50-50 chance of earning the bonus. If Hudson takes the offer that maximizes his expected utility and he is risk-neutral, then

A) he will take the first offer.
B) he will take the second offer.
C) he is indifferent between the offers-both yield the same expected utility.
D) Indeterminate from the given information-we cannot say what he will do.