Assume that your annual salary and your federal income tax rate are $83,000 and 25% respectively.As a first run, suppose that you assume that the possible values for your medical expenses are $4200, $3500, $2800 and $2100 with probabilities 0.1, 0.2, 0.4 and 0.3 respectively.You also decide that the only reasonable values to deposit into the TSB are $4200, $3500, $2800 and $2100.

Find the post-TSB salary (i.e., the element of the payoff table) associated with a TSB deposit of $3500 and actual medical expenses $2800 and put your answer in cell D3 of the Answer Summary Sheet.What would the post-TSB salary be for a TSB deposit of $2800 and actual medical expenses $3500?