Assume That the Utility Function of an Individual Is Represented

Multiple Choice

Assume that the utility function of an individual is represented as U =√W - 0.001W; where W (his present wealth) = $250,000.He considers investing in a gamble which would double his wealth if he wins but still leave him with $250,000 if he loses.Given that his probability of winning is 0.6, calculate his expected wealth from the bet.

A) $300,000
B) $400,000
C) $250,000
D) $100,000