part of a risk management analysis, she forecasted the expected frequency and severity of losses $($given in the figure$).$ Kim has obtained two insurance coverage bids from Insurer A and Insurer B$.$

Insurer A bid: annual premium $=$ $$30,000$; per$-$occurrence deductible $=$ $$5,000$

Insurer B bid: annual premium $=$ $$20,000$; per$-$occurrence deductible $=$ $$10,000$

Which coverage bid should Kim select if she wants to maximize value? Use the NPV analysis to make the decision. Assume a discount rate of $5$ percent and that premiums are paid at the beginning of the year and losses$/$deductibles are paid at the end of the year.

Expected Frequency of Losses Expected Severity of Losses

$13$ $ $5,000$

$4$ $ $10,000$

$2$ $ $15,000$