2. Anna has initial wealth 1 million. She is thinking of opening a restaurant on Craig street. If the restaurant fails it is worth zero, if it succeeds it is worth $1 million. She does some market research and find 30% of restaurants fail and 70% succeed. She uses these figures as the probability for failure and success. a. What is the expected value of the restaurant (not thinking about any costs you might pay)? [1pt] b. Suppose the restaurant cost $500 000 to set up. Would she want to set the restaurant up if she was risk-neutral? [1pt] Now, suppose Bob has risk preferences represented by the following utility function U(M) = \\{M with the same initial wealth as Anna, facing the same decision with the same probabilities. [Don't forget that in these questions you will need to work out the final wealth V; in each event by adding and subtracting to the initial wealth of 1 million.] c. What is Bob's expected utility if he doesn't set up the restaurant, i.e., gets $1,000,000 for sure? [1pt] d. What is his final utility if he sets up the restaurant and it succeeds? [1pt] e. What is his final utility if he sets up the restaurant and it fails? [1pt] f. What is his expected utility from setting up the restaurant? [1pt]