What is the lowest amount of no-risk income accenture

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Suppose during your final year at Cornell you are offered a job with a new startup or Accenture Global Health Consulting. Accenture would pay you $40,000 for sure. The start-up will pay you one of two salaries based on firm performance. You determine that if you take the job at the start-up there is 50% chance you would earn $90,000 but also a 50% chance you earn only $6,400.

Problem a.
If you made your job choice based on the expected income which job would you choose?

Problem b.
If you made your job choice based on the expected utility of your income and your utility function is given by U = √I (utility is equal to the square root of income) what job would you choose?

Problem c
. Under the expected utility model what is the lowest amount of no-risk income Accenture could offer you and still have you choose them over the start-up?

Reference no: EM132961827

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