Question
CareLess Industries has two divisions with Division 1 making an artificial sweetener and Division 2 making an insect repellant. CareLess's net worth of Division 1
CareLess Industries has two divisions with Division 1 making an artificial sweetener and Division 2 making an insect repellant. CareLess's net worth of Division 1 is $1,000 and net worth of Division 2 is $750. There is a chance that CareLess could have a $400 liability for pollution damage from Division 2. The probability of such a loss is 0.05/(1+s), where s is the amount the firm spends on safety. What is the optimal amount that CareLess should spend on safety?
Can you please confirm that the optimal amount that should be spent on safety is equal to:
4.472135
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