Bottega Industries is considering purchasing an insurance policy for its new office building in Chicago, USA. The policy has an annual cost of $10,000. If Bottega Industries doesn't purchase the insurance and minor fire damage occurs, a cost of $100,000 is anticipated; the cost if major or total destruction occurs is $200,000. The costs, including the state-of-nature probabilities, are as follows: Damage Decision Alternative None, $1 Minor, $ Major, S3 Purchase insurance, d 10,000 10,000 10,000 Do not purchase 0 100,000 200,000 insurance, d Probabilities 0.96 0.03 0.01 a) Using the expected value approach, what decision do you recommend? b) Assume that you found the following indifference probabilities for the decision alternatives. What decision would you recommend? Indifference Probability Cost 10,000 p=0.99 p=0.60 100,000 c) Do you favor using expected value or expected utility for this decision problem? Why