How much should be budgeted for each bridge in case of failure (see Chapter 10)? Costs and probabilities are as summarized in the table below. Assume that failure would occur in year 25. Use an annually compounding interest rate of 5%.   ABC Conventional Direct cost to the company if the bridge fails $75,000,000 $225,000,000 Indirect cost to the company if the bridge fails (loss of goodwill) $100,000,000 $75,000,000 Probability of bridge failure 1/800 1/500     Please explain what the budget is and what its for!

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.