(Answered) : This question is for a Quantitative Business Anaysis graduate course. This one question with multiple parts. John Smith, owne

This question is for a Quantitative Business Anaysis graduate course. This one question with multiple parts.

John Smith, owner of Smith Riverside Diner, is trying to decide whether to purchase an insurance policy to cover flood damage on his diner that is located on the bank of Mohawk river. Rainstorms occur frequently and then Mohawk river may flood the restaurant. John estimates the potential damage from flood in the coming year as:

Flood Damage No Damage Mild Damage Severe Damage Total Damage
Damage Amount in Dollars $0 $15,000 $35,000 $50,000
Probability 0.62 0.22 0.11 0.05
John is considering three alternatives for dealing with this flood risk:

• John can buy an insurance policy for $16,000 that would cover