Use the Information for the Question(s)below

question 9

Multiple Choice

Use the information for the question(s) below.
Your firm faces an 8% chance of a potential loss of $50 million next year.If your firm implements new safety policies,it can reduce the chance of this loss to 3%,but the new safety policies have an upfront cost of $250,000.Suppose that the beta of the loss is 0 and the risk-free rate of interest is 5%.
-If your firm is uninsured,the NPV of implementing the new safety policies is closest to:

• A)$2.25 million.
• B)-$.25 million.
• C)$2.5 million.
• D)$2.15 million.

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Definitions:

Proper Fee

An appropriate or justified charge for a service or product, often determined by cost, market value, and quality.

Individual Charge

A specific amount of money billed to a person for a product or service.

Immediate Medical Help

Urgent assistance provided by healthcare professionals in response to a person's acute healthcare needs.

Trouble Breathing

A symptom characterized by difficulty in breathing or experiencing shortness of breath, potentially indicative of various medical conditions.