Question

Tom wants to avoid any accidents on the work floor of his factory. if an accident does occur, it would cost him $500,000 in damages. installing safety equipment would decrease the probability of an accident occurring from 20% to 10%. however, the equipment costs $20,000 to install. 10. what is his expected loss after installing the safety equipment
a. $20,000

b. $50,000

c. $100,000

d. $125,000

Answer 1

after all the calculations it should be about $20,000 flat rate