From Eagle Mountain Arizona to Morongo Valley California Kev

From Eagle Mountain, Arizona to Morongo Valley, California, Kevin can take either 1-10 or US-60. Taking 1-10 will get you to Morongo Valley 21 minutes faster. Traveling at US-60 is relatively safe but the odds of dying by taking the freeway 1-10, were cars overspeed a lot, is 10 in 100,000. If Kevin is paid $70 an hour, how much does he value his life if he chooses to take 1-10? Use the Jones-Lee approach to compute.

a.

$24,500

b.

$2.45 million

c.

$245,000

d.

$147 million

e.

none of the above

Solution

a.

$24,500