Suppose your company has a building worth $530 million. Because it is located in

Question

Suppose your company has a building worth $530 million. Because it is located in a high-risk area for natural disasters, the probability of a total loss in any particular year is 1.0 percent.

What is your company’s expected loss per year on this building? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Enter your answer as a positive value.)

Suppose your company has a building worth $530 million. Because it is located in a high-risk area for natural disasters, the probability of a total loss in any particular year is 1.0 percent.

What is your company’s expected loss per year on this building? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Enter your answer as a positive value.)

Explanation / Answer

Expected Loss= Building Value* Probability of Loss

Expected Loss= $530,000,000*1%

Expected Loss= $5,300,000

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