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b) Evaluate all alternatives (or combinations given the budget) to determine the best (financially) allocation of the $1,000.

b) Evaluate all alternatives (or combinations given the budget) to determine the best (financially) allocation of the $1,000.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Solve only b part that i highlight by red pen Plz solve this carefully and correctly i need perfect soloution in one hour
1) Perform a cost/benefit analysis using fault-tree analysis on a stairway. Assume that over the last year, three accidents were caused by slippery surfaces, five were caused by inadequate railings, and three by someone negligently leaving tools or other obstacles on the steps. The average cost for each accident was $200 (total for first aid, lost time, etc.). Assume that you have been allocated $1,000 to improve the safety of the stairway (although you don't need to spend all of the money). There are three alternatives which could be employed: 1) new surfaces, which will reduce accidents caused by slippery surfaces by 70% and cost $800, 2) new railings, which will reduce accidents caused by inadequate railings by only 50% (since not all pedestrians use railings!) and cost $1,000 3) signs and educational programs, which are estimated to reduce both railing and obstacle related accidents, each by 20% (people forget easily) but cost only $100. (To calculate basic event probabilities, assume the stairway is 5 times per hour, 8 hours a day, 5 days a week, 50 weeks a year.) a) Draw a fault tree of the situation. b) Evaluate all alternatives (or combinations given the budget) to determine the best (financially) allocation of the $1,000. c) Now consider the ethical considerations of not trying to eliminate injuries as much as possible. Evaluate all alternatives regardless of cost. What about allocating even more money to reduce the likelihood of injuries even further. At what point to you stop putting money into the problem and say enough is enough?
Transcribed Image Text:1) Perform a cost/benefit analysis using fault-tree analysis on a stairway. Assume that over the last year, three accidents were caused by slippery surfaces, five were caused by inadequate railings, and three by someone negligently leaving tools or other obstacles on the steps. The average cost for each accident was $200 (total for first aid, lost time, etc.). Assume that you have been allocated $1,000 to improve the safety of the stairway (although you don't need to spend all of the money). There are three alternatives which could be employed: 1) new surfaces, which will reduce accidents caused by slippery surfaces by 70% and cost $800, 2) new railings, which will reduce accidents caused by inadequate railings by only 50% (since not all pedestrians use railings!) and cost $1,000 3) signs and educational programs, which are estimated to reduce both railing and obstacle related accidents, each by 20% (people forget easily) but cost only $100. (To calculate basic event probabilities, assume the stairway is 5 times per hour, 8 hours a day, 5 days a week, 50 weeks a year.) a) Draw a fault tree of the situation. b) Evaluate all alternatives (or combinations given the budget) to determine the best (financially) allocation of the $1,000. c) Now consider the ethical considerations of not trying to eliminate injuries as much as possible. Evaluate all alternatives regardless of cost. What about allocating even more money to reduce the likelihood of injuries even further. At what point to you stop putting money into the problem and say enough is enough?
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