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A company operating an internal combustion engine research and development facility is considering the purchase of insurance to protect against the financial liability if a
A company operating an internal combustion engine research and development facility is considering the purchase of insurance to protect against the financial liability if a fire were to occur in their facility Assuming that the company is risk averse with an exponential utility function and a risk preference of 1/$250,000, and the annual probability of a fire in the facility is 0.009 , what annual insurance premium is the company willing to pay to protect against damages in the amount of $350,000 ? $9,590 $6,781 $3,150 $1,701 $4,298
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