Question

Lighter Than Air Industries expects that it would lose $10 million if a tornado struck its aircraft operations facility. It expects that a tornado might strike the facility once every 100 years. What is the single loss expectancy for this scenario?

Answer 1

Answer:

Single loss expectancy = $10,000,000

Explanation:

Given:

Loss of amount if tornado hit = $10,000,000

Single loss expectancy = ?

Computation of Single loss expectancy:

Single loss expectancy = Assets value × Exposure factor

Single loss expectancy = $10,000,000 × 1

Single loss expectancy = $10,000,000

Annual loss expectancy = Assets value / Expected year

Annual loss expectancy = $10,000,000 / 100

Annual loss expectancy = $100,000