A homeowner (with no outstanding mortgage) is considering buying fire insurance. The possibility of damage from fire in a particular year is 0.04 and the amount of damage caused by a fire is $80,000. The fire insurance premium is $900 /year and the deductible amount on a loss is $600. Assume the individual's total wealth, including the home, is $140,000 and his utility function is: u(W)=1e0.00003W a. Find the risk premiums associated with two options: "buy insurance" and "don't buy insurance". Which one would you recommend? Show your substantiating analysis. b. If the deductible amount on a loss is higher than $600, the homeowner might prefer not to buy fire insurance, on an EU basis. Determine the deductible amount that would make the homeowner indifferent about choosing between buying and not buying insurance, on an EU basis. A homeowner (with no outstanding mortgage) is considering buying fire insurance. The possibility of damage from fire in a particular year is 0.04 and the amount of damage caused by a fire is $80,000. The fire insurance premium is $900 /year and the deductible amount on a loss is $600. Assume the individual's total wealth, including the home, is $140,000 and his utility function is: u(W)=1e0.00003W a. Find the risk premiums associated with two options: "buy insurance" and "don't buy insurance". Which one would you recommend? Show your substantiating analysis. b. If the deductible amount on a loss is higher than $600, the homeowner might prefer not to buy fire insurance, on an EU basis. Determine the deductible amount that would make the homeowner indifferent about choosing between buying and not buying insurance, on an EU basis