A factory has a flooding probability of 1% per year. When flooded, the factory will suffer 500,000 EUR in material damages. The existing insurance will certainly cover the material damages, a deductible of 20% will however apply. When flooded the factory will suffer another 500,000 EUR in opportunity cost of lost production time, which are not covered by insurance. A local plumbing firm has made an offer of installing a pump that would avoid this flooding and costs 5,000 EUR per year. Your boss asks you if this is a good idea? (assuming no recovery rate). a) Calculate Expected Loss p.a
A factory has a flooding probability of 1% per year. When flooded, the factory will suffer 500,000 EUR in material damages. The existing insurance will certainly cover the material damages, a deductible of 20% will however apply. When flooded the factory will suffer another 500,000 EUR in opportunity cost of lost production time, which are not covered by insurance. A local plumbing firm has made an offer of installing a pump that would avoid this flooding and costs 5,000 EUR per year. Your boss asks you if this is a good idea? (assuming no recovery rate). a) Calculate Expected Loss p.a
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter15: Decision Analysis
Section: Chapter Questions
Problem 20P: Alexander Industries is considering purchasing an insurance policy for its new office building in...
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A factory has a flooding probability of 1% per year. When flooded, the factory will suffer 500,000 EUR in material damages. The existing insurance will certainly cover the material damages, a deductible of 20% will however apply. When flooded the factory will suffer another 500,000 EUR in
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