You wish to hire Ricky to manage your Dallas operations. The profits from the operations depend partially on how hard Ricky works, as follows:

	Probabilities
	Profit = $10,000	Profit = $50,000
Lazy Worker	60%	40%
Hard Worker	30%	70%

If Ricky is lazy, he will surf the Internet all day, and he views this as a zero cost opportunity. However, Ricky would view working hard as a personal cost valued at $1,000. What fixed-percentage of the profits should you offer Ricky? Assume Ricky only cares about his expected payment less any personal cost.

a. 6.25%

b. 7.85%

c. 8.33%

d. 9.46%