This week, Modus's CEO Rajay Karunakaran announced that Modus will be hiring 5 new employees who have just graduated from University. These recent graduates are being hired so that they can learn how to operate the new Olympus IX83 Inverted Fluorescence Motorized Microscope that Modus purchased last month. As one of the most advanced microscopes on the market, it cost Modus $37,000 alone. And while less expensive than the microscope itself, the tray alone costs $1,750. When the new hires arrive, Chief Scientific Officer, Shaw Jackson, will need to train them on how to use the new microscope, and he is afraid that during their learning process, the microscope, tray, or both will be damaged. He expects that there is a 3% chance that the microscope would be damaged enough that it needs to be replaced, but a 11% chance that due to heavy use, just the tray will have to be replaced. Then there is the unlikely chance that an accident would cause both to need replacing, about 1.5%. After some investigation, Shaw finds three insurance companies who will insure lab equipment of this sort. The Collaborators is offering a policy with a $2500 deductible for a premium of $1600. Apollo Cover has a full insurance policy for a premium of $3,250. Beneva is asking for a $2,500 premium and the policy would have a maximum coverage of $34,000 1. Please calculate the expected value for each of the three insurance policies as well as for the option of not buying insurance. Show your work. 2. As usual, "not buying insurance" has the highest expected value. Can you think of a good reason why Rajay might decide to buy insurance in this case anyway?