Whitewater rapids provides canoes to tourists eager to ride whitewater river's rapids. management has determined that there is one chance in a thousand of a customer being injured or killed. settlement of resulting lawsuits has an average cost of $850,000. insurance with a $100,000 deductible is available. it covers the costs of lawsuits, unless there is evidence of criminal negligence. what is the expected loss with insurance?
a) $100
b) $850
c) $100,000
d) $850,000

The expected loss with insurance is $100,000

Explanation:

The expected loss with insurance is $100,000 because this is the value of the deductible. If Whitewater Rapids doesn´t take out the insurance, the loss would be for the total cost of lawsuits.

The values of $100 and $850 make no sense.

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