205k views
0 votes
Whitewater Rapids provides canoes to tourists eager to ride Whitewater river's rapids. Management has determined that there is one chance in a thousand of a customer being injured or killed. Settlement of resulting lawsuits has an average cost of $850,000. Insurance with a $100,000 deductible is available. It covers the costs of lawsuits, unless there is evidence of criminal negligence. What is the expected loss with insurance?

A) $100
B) $850
C) $100,000
D) $850,000

User Solenoid
by
8.2k points

1 Answer

5 votes

Answer:

The expected loss with insurance is $100,000

Step-by-step explanation:

The expected loss with insurance is $100,000 because this is the value of the deductible. If Whitewater Rapids doesn´t take out the insurance, the loss would be for the total cost of lawsuits.

The values of $100 and $850 make no sense.

User Rand
by
8.0k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories