Question
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
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 expected number of worker injuries and the third column gives the expected severity per injury (cost to sommer per injruy) associated with each expenditure level. How much should Sommer spend on safety if it is trying to maximize firm value? Ignore the time value of money.
Expenditure | Expected Injuries | Severity |
$0 | 10 | $10,000 |
$15,000 | 7 | $8,000 |
$30,000 | 5 | $7,000 |
$45,000 | 4 | $5,000 |
$60,000 | 3 | $5,000 |
$75,000 | 2 | $5,000 |
Please show all calculations and work
Cost per severity is the third column as said in the instructions
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