Suppose that a decision maker's risk attitude toward monetary gains or lossesxgiven by the utility functionU(x) = In(50,000 + X).

If there is a 2% chance that one of the decision maker's family heirlooms, valued at $6,000, will be stolen during the next year, what is the most that she would be willing to pay each year for an insurance policy that completely covers the potential loss of her cherished items? (Hint: Recall, for example, that if In(z) = C, then Z = e^c.)

a) 12.6712

b) 123.75

c) 127.67

d) 132.32