Suppose an individual makes $50,000 of income per year. Her utility function is given by, where x is her income minus expenses. She realizes that there is about a 5% probability that she may suffer a heart attach in any given year. The cost of treatment will be $20,000 if a heart attack occurs.

She has the option of buying health insurance for $1,000 per year, which will cover all expenses in case of a heart attack. What is the maximal amount she is willing to pay for health insurance?

(Note:is a different way of writing the square root of x)

Round all answers (also intermediate answers to 2 decimals).

a.1162.63

b.981.07

c.1120.54

d.2213.59