You own a house worth $700,000 that is located on a river. If the river floods moderately, the house will be completely destroyed. Moderate flooding happens about once every 40 years. If you build a seawall, the river would have to flood heavily to destroy your house, and such heavy flooding happens only about once every 150 years. a. What would be the annual premium for a flood insurance policy that offers full insurance? Make sure to show your work. b. For a policy that pays only 75% of the home value, what are your expected costs with and without a seawall? Make sure to show your work c. Do the different policies provide an incentive to be safer (i.e., to build the seawall)? You own a house worth $700,000 that is located on a river. If the river floods moderately, the house will be completely destroyed. Moderate flooding happens about once every 40 years. If you build a seawall, the river would have to flood heavily to destroy your house, and such heavy flooding happens only about once every 150 years. a. What would be the annual premium for a flood insurance policy that offers full insurance? Make sure to show your work. b. For a policy that pays only 75% of the home value, what are your expected costs with and without a seawall? Make sure to show your work c. Do the different policies provide an incentive to be safer (i.e., to build the seawall)