Suppose that your wealth is $250,000. You buy a $200,000 house and invest the remainder in a risk-free asset paying an annual interest rate of 6%. There is a probability of 0.001 that your house will burn to the ground and its value will be reduced to zero. i. With a log utility of end-of-year wealth, i.e., U(W) = ln (W), how much would you be willing to pay for insurance (at the beginning of the year)? (Assume that if the house does not burn down, its end-of-year value still will be $200,000.) ii. If the cost of insuring your house is $1 per $1,000 of value, what will be the certainty equivalent of your end-of-year wealth if you insure your house at a. its value b. its full value c. 1 times its value