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1. Sommer Inc. is trying to determine how much to spend on safety equipment for its plant. The first column in the following table gives
1. Sommer Inc. is trying to determine how much to spend on safety equipment for its plant. The first column in the following table gives values for possible expenditures. The second column gives the expected number of worker injuries and the third column gives the expected severity per injury (cost to Sommer per injury) associated with each ex- penditure level. How much should Sommer spend on safety if it is trying to maximize firm value? Ignore the time value of money. Expected Expenditure Injuries 0 10 Severity $10,000 $15,000 30,000 45,000 60,000 75,000 75432 8,000 7,000 5,000 5,000 2 315,000 5,000
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