Use the Information for the Question(s)below

Multiple Choice

Use the information for the question(s) below.
Your firm faces an 8% chance of a potential loss of $50 million next year.If your firm implements new safety policies,it can reduce the chance of this loss to 3%,but the new safety policies have an upfront cost of $250,000.Suppose that the beta of the loss is 0 and the risk-free rate of interest is 5%.
-If your firm is uninsured,the net present value (NPV) of implementing the new safety policies is closest to:

A) $2.25 million
B) -$.25 million
C) $2.5 million
D) $2.15 million
E) $2.75 million