Taylor has the option to invest in an asset. Her financial advisor has told her there is an expected value (utility) of $20,000 on the asset. With some probabilityp, the asset pays off well ($45,000). However, there is some chance that it will flop (1-p), and pay poorly ($2000).

• a. What are the probabilities that the asset will pay well and poorly (p and 1-p)? Show your calculations using the expected value formula.
• b. If she has $21000 to invest, should she invest in the asset? Why or why not?