Your firm faces a 9% chance of a potential loss of $10 million next year. If your
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a. If the firm is uninsured, what is the NPV of implementing the new policies?
b. If the firm is fully insured, what is the NPV of implementing the new policies?
c. Given your answer to part (b), what is the actuarially fair cost of full insurance?
d. What is the minimum-size deductible that would leave your firm with an incentive to implement the new policies?
e. What is the actuarially fair price of an insurance policy with the deductible in part (d)?
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