Martha had several unpleasant experiences trying to find the merchandise she needed at a large lumber yard and hardware store. the employees—when she could find them—rarely seemed to know where anything was outside of their own departments. but on her most recent visit, she was pleasantly surprised to find that the store had installed kiosks where she could get directions quickly and accurately. the store had found a technological solution to the services marketing issue of:

Your company is starting a new r& d initiative: a development of a new drug that dramatically reduces the addiction to smoking. the expert team estimates the probability of developing the drug succesfully at 60% and a chance of losing the investment of 40%. if the project is successful, your company would earn profits (after deducting the investment) of 9,000 (thousand usd). if the development is unsuccessful, the whole investment will be lost -1,000 (thousand usd). your company's risk preference is given by the expected utility function: u(x) v1000 +x, where x is the monetary outcome of a project. calculate the expected profit of the project . calculate the expected utility of the project . find the certainty equivalent of this r& d initiative . find the risk premium of this r& d initiative e is the company risk-averse, risk-loving or risk-neutral? why do you think so?