If your firm is fully insured,the NPV of implementing the new safety policies is closest to:
A)$2.15 million
B)$2.5 million
C)$2.25 million
D)-$.25 million

Question

Quizplus · Accepted Answer

D)If the firm is fully insured,the insurance company will pay for the loss regardless if whether the safety program is in force or not.Therefore,the end of period cash flows will be identical with or without the program and the NPV is -$250,000 reflecting the cost of the safety program.

If Your Firm Is Fully Insured,the NPV of Implementing the New