Global Gas International offers to contract the Halidurton Heavy Construction Co

Question

Global Gas International offers to contract the Halidurton Heavy Construction Corporation to build an oil pipeline from Canada to New Orleans that l provide Halidurton $1,500 million in income. The probability that the oil pipelineil leak, causing environmental damage is 0. If so, the legal liability will be 7,500 million. If Halidurton is risk neutral and liable for the damages from a leak, what is the such that it is indifferent between accepting and rejecting the contract? Halidurton is indifferent between accepting and rejecting the contract if 0 equalspercent. (Enter your response rounded to the nearest whole number.) If Halidurton is risk averse and fair insurance is offered, how much insurance would it buy? Assume is such that it is worthwhile for Halidurton to build the oil pipeline. As a function of 0, Halidurton would be willing to purchase insurance such that it has income of S(enter equation) million regardless of whether there is a leak. If Global Gas International will partially indemnify Halidurton so that the largest damages that Halidurton would have to pay is $6,000 milion, what is the 0 that leaves it indifferent about accepting the contract? If Halidurton's liability is capped at $6.000 million, then Halidurton is indifferent between accepting and rejecting the contract if equals percent If partially indemnified, how much fair insurance will Halidurton buy? When partially indemnified, Halidurton (if risk averse) would be wlling (as a function of 0) to purchase insurance such that it has income of S(enter equation) million regardless of whether there is a leak.

Explanation / Answer

Halidurton days in different between accepting and rejecting the contract by 20%.

Halidurton would be willing to purchase insurance such that it has a income of 7500 million.

If Halidurton liability is kept at 6000 million dollar the hell Ouliability is kept at 6000 million dollar the liability is capped at 6000 million dollar the halidurton is in different between accepting and rejecting the contract by 25%.

When partially indemnified halidurton is risk averse would be willing to purchase insurance such that it is a income of 6000 US Dollar.

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.