An auto insurance company is implementing a new bonus system. In each month, if a policyholder does not have an accident, he or she will receive a 6.00 cash- back bonus from the insurer. Among the 1,000 policyholders of the auto insurance company, 3500 are classified as low-risk drivers and 650 are classified as high-risk drivers. In each month, the probability of zero accidents for high-risk drivers is .75 and the probability of zero accidents for low-risk drivers is .90. Calculate the expected bonus payment from the insurer to the 1,000 policyholders in one year.
Q: The rate of return on U.S. T-bills is 3.25% and the expected return on the market is 9.50%. J&X, Inc...
A: Systematic risk is the risk of the market volatility, Systematic risk affects entire market not ju...
Q: Assume a selling price of $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years. If...
A: Here selling price is 88,000 and down payment is 24,000 Hence loan amount = selling price - down pay...
Q: John purchased a pair of shoes with a retail price of $49.99 from a store. If the sales tax rate was...
A: Sales tax is a form of indirect taxes which is being payable on sale of goods or services by the sel...
Q: 1. The NPV for each projects 2. The ANPV for each investment projects 3. Payback period for all proj...
A: Net present value (NPV) of an alternative refers to the variance between the initial investment or p...
Q: I want to know how to calculate salvage value of the projects in this problem. Tnx
A: Salvage value is the end value of the equipment at which that equipment can be sold after proper usa...
Q: What happens to junk bonds in a recession
A: A junk bond refers to that that bond issued by companies that do not have an investment grade credit...
Q: The ordered pairs (0 , 5000) and (10 , 13591.41) represent the value of an investment at two differe...
A: Given, The investment at year 0 is 5000. The investment after 10 years is 13591.41
Q: After the repurchase how many shares
A: Shares are the equity ownership of the corporation. Dividends to be paid out of profits to all the e...
Q: Choosing to commute to work by driving a hybrid vehicle will save $130 every quarter in fuel. If mon...
A: The present value method is a method of finding out the profitability of the project by discounting ...
Q: A construction company agreed to lease payments of $649.32 on construction equipment to be made at t...
A: Lease agreement gives the right to use the assets during the given period by the payment of the peri...
Q: Find the term of the following ordinary general annuity. State your answer in years and months (from...
A: Future value (F) = $18,500 Interest rate (r) = 5.40% Number of compounding per year (m) = 4 Periodic...
Q: 40. Jim has earned an average of $3,290 per month over his lifetime. He is planning to retire at 66,...
A: Solution:- Retirement benefit means the amount of money payable to a person when he/she retires from...
Q: A young couple has decided to make advance plans for financing their 5 year old daughter’s college e...
A: Number of deposits (n) = 10 First deposit one year after today r = 3% Let the annual deposit = A Wit...
Q: The required price per share will be $
A: Face Value or Maturity value of Bond = $1000 Conversion ratio = 31 Required price of share = Face V...
Q: Calculate the capitalized cost of a project that has an initial cost of P8,000,000 and an additional...
A: Initial Cost = P8,000,000 Additional Cost = P250,000 every 8 Year Annual operating costs = P150,000 ...
Q: In 2014, ABC has net income of P5,000,000, and it has 2,000,000 shares of common stock outstanding. ...
A: Net Income P 5000000 Common Stock Outstanding 2000000
Q: hat should be the prices of the following preferred stocks if comparable securities yield 8 percent?...
A: Preferred Stock: These are company stocks having the properties of both debt and equity instruments...
Q: 43.40 Euro 54.30 52.30 What rate will you apply for a Euro gift received by the re...
A: Foreign Exchange Rate is referred as the price of the one currency in terms of another currency.
Q: Suppose you make quarterly deposits into an account that earns 6% annual interest compounded monthly...
A: Interest rate (r) = 6% Number of compounding per year (m) = 12
Q: this project acceptable?
A: The return is the profit or loss that an investor anticipated on an investment. It is to be calculat...
Q: An $90,000 loan is amortized by payments of $1850 at the end of every six months at a rate of 2% com...
A: Mortgage loan is a type of loan where funds are availed against an asset as collateral to the lender...
Q: Find the term of the following ordinary general annuity. State your answer in years and months (from...
A: Solution:- When an equal amount is paid at end of each period, it is called as ordinary annuity. Now...
Q: 1. Explain in detail the term receivable float. 2. Explain briefly with your rationale reasoning wh...
A: Receivable management may be a process of managing the account receivables within a business . Accou...
Q: The firm uses measures from its financial statements to improve shareholder value. What element in t...
A: Managers engage in transactions in order to boost the firm's worth. Of fact, the value of a company ...
Q: Sally decides to buy a Treasury note futures contract for delivery of $100,000 face amount in Decemb...
A: Here, Buy a Treasury Note at 110'8.5 Note: T notes are quoted in 32nds Therefore, Value of Treasury ...
Q: A debt of $52000 with interest at 9 6% compounded quarterly is to be repaid by equal payments at the...
A: The present value of debt is equal to the sum of the present value of all future monthly installment...
Q: wn stocks in an oil palm plantation company, and you read in the financial press that a recent bond ...
A: Debt/equity ratio is one of the main criteria in capital structure of the firm and business risk and...
Q: ex Unlimited is working upon the renovation of its factory upcoming year and for they expect an outf...
A: In BCR ratio analysis we can calculate the annual cost and annual benefits and find out the ratio of...
Q: hat is the future worth of P8500 deposited at the end of every month for 3 years if the interest is ...
A: The future value of money includes the amount deposited and the interest accumulated over the period...
Q: company agreed to lease payments of $571.08 on construction equipment to be made at the end of every...
A: In construction lease of equipment is common practice which gives the right to use equipment by paym...
Q: A put option with an exercise price of P90 was priced at P4. At expiration, the underlying stock is ...
A: A put option is a contract that grants the holder the right to sell a certain number of equity share...
Q: A company only has £2,000 to invest at time t0 in projects P, Q and R. Each project is infinitely di...
A: Expected NPV Expected NPV is the weighted average NPV of projects. When there is 'n' number of proje...
Q: 13. An all-equity firm currently has 1,000,000 shares outstanding with a market price of $10. The fi...
A: Value of an unlevered firm When a firm has both equity and debt in its capital structure, it is know...
Q: If a firm borrows $50 million for one year at an interest rate of 9 percent, what is the present val...
A: In this question first we need to calculate the interest amount. Interest amount=$50 million*9%=$4.5...
Q: Question 17 Issuing stock rather than increasing debt: O all of the other answers O reduces financia...
A: As per Bartleby Honor Code, when multiple questions are asked, the expert is required only to solve ...
Q: ged with the bank for a 6-month line of credit of $200,000 at prime plus 2%. Prime rate is 4%. The b...
A: Banks give the line of credits to small business where they can withdraw money at any time and pay a...
Q: Given the returns of two shares F and H in the table below over the past 4 years. Find the average r...
A: The question related to portfolio management. we will first compute the average return of the portfo...
Q: What is a stock's realized abnormal return if the stock had a 3% return and the stock had a Beta=1.2...
A: Realized return Realized return is referred to as the actual return earned by the stock and is also ...
Q: If Inflation and the interest rate were both zero, would there still be a time value of money? State...
A: The concept of time value of money says that money today has more worth than the same amount of mone...
Q: A man paid 10% down payment of P1,000,000 for a house and lot this month of January. The rate of int...
A: Annuity is a set of regular payments being made at regular interval. The formula to calculate the ef...
Q: A company has £5 million available and three possible projects, all of which are divisible: Project...
A: When dealing with investment appraisal of divisible projects, we should use profitability index. Pro...
Q: Explain the foreign currency swaps and why are they undertaken? Explain the functional currency and ...
A: A foreign currency swap, also known as an FX swap, is an agreement between two foreign parties to ex...
Q: Why are UK government bonds considered a risk-free investment? Discuss the risk of exposed to market...
A: A bond is a fixed-income instrument that reflects a loan made by an investor to a borrower, and a bo...
Q: A credit union pays 7.7% annual interest compounded daly. What deposit today (present value) would a...
A: Here the compounding is daily. We need to find the effective annual rate (EAR) first and then solve ...
Q: Invest in any or all of the four projects whose relevant cash flows are given in the following table...
A: Hi, since you have posted a question with multiple sub-parts, we will answer the first three sub-par...
Q: Bob Jones bought a new log cabin for $70,000 at 11% interest for 30 years. Prepare an amortization s...
A: The loan which are paid in installments as annuity follows the amortization process in which the pay...
Q: What is the basic or essential function of the financial markets? Briefly explain how and in what al...
A: Financial market is referred as the market, where the people used to trade the financial derivatives...
Q: You are able to sell 15 gallons of ghost pepper sauce per month at a price of $200 per gallon. Re- s...
A: Price per gallon (P) = $200 Number of gallons sold at price P (n) = 15 With every $9 reduction, 2 mo...
Q: The rate charged for issue of foreign currency notes for travelling abroad to the customer.
A: The rates mentioned in each case are selling and buying rates for the market maker or the commercial...
Q: Given the following information for three publically traded comparable companies, estimate the the c...
A: Cost of capital for all equity financed company Cost of capital for all equity financed company is b...
Step by step
Solved in 3 steps
- A company sells flood insurance to homeowners for $230 per year. It estimates there is a 1.2% chance of any house flooding in a year. When a house floods, the company's average payout is $17,600 (though the company keeps the $230 in any case). What is the company's expectation for each policy sold?Unemployment Insurance. Each worker employed by Risky Business has a 20 percent chance of losing his or her job in the next year. Each worker employed by Safe Business has a 2 percent chance of losing his or her job. You manage an insurance company that provides a lump sum of $10,000 to each unemployed worker. a. The minimum amount you would charge Risky Business for each employee covered by the unemployment policy is $. (Enter your response as an integer.) b. The minimum amount you would charge Safe Business for each employee covered by the unemployment policy is $ (Enter your response as an integer.) c. Suppose you charge the same premium to both businesses. The companies have the same number of workers and are required to purchase unemployment insurance. The minimum amount you would charge is $. (Enter your response as an integer.)A career counselor decides to make monthly payments of $150 on credit card debt of $3,496.46 and discontinue using that credit card. Assuming the monthly interest rate is 1.85%, it will take the counselor approximately 31 months to repay the debt. How many fewer months would it take to repay the debt if the counselor makes monthly payments of $200? (Round your answer to the nearest month.)
- A career counselor decides to make monthly payments of $150 on credit card debt of $3489.64 and discontinue using the credit card. (a). Assuming the annual interest rate is 22.2%, how many months will it take her to repay the debt? Round to the next month. b) How many fewer months would it take to repay the debt if the counselor makes monthly payments of $200. Round to the next month.A career counselor decides to make monthly payments of $150 on credit card debt of $3,496.55 and discontinue using that credit card. Assuming the monthly interest rate is 1.85%, it will take the counselor approximately 31 months to repay the debt. How many fewer months would it take to repay the debt if the counselor makes monthly payments of $200? (Round your answer to the nearest month.) monthsA career counselor decides to make monthly payments of $150 on credit card debt of $3,496.55 and discontinue using that credit card. Assuming the monthly interest rate is 1.85%, it will take the counselor approximately 31 months to repay the debt. How many fewer months would it take to repay the debt if the counselor makes monthly payments of $200? (Round your answer to the nearest month.) months Need Help? Watch It Read It
- Prydain Pharmaceuticals is reviewing its employee healthcare program. Currently, the company pays a fixed fee of$300 per month for each employee, regardless of the number or dollar amount of medical claims filed. Anotherhealth-care provider has offered to charge the company$100 per month per employee and $30 per claim filed. Athird insurer charges $200 per month per employee and$10 per claim filed. Which health-care program should Prydain join? How would the average number of claimsfiled per employee per month affect your decision?Lokalalo has plenty of customers, who because of the nature and price of the work these customers are typically given a month to pay for the work. At 31 August 2020, Lokalalo has $1,500,000 in accounts receivable. Lokalalo anticipates that 10% of their customers will default and not pay at all. You are a student studying BUS 114 and have been approached by Paulo Jr. the managing director to answer his following questions. What value will the accounts receivable (debtors) be recorded for in the balance sheet on 31 August and why?In Year 1, began to receive complaints from physicians that patients were experiencing unexpected side effects from the company’s sleep apnea drug. The company took the drug off the Market near the end of Year 1. During Year 2, the company was sued by 800 customers who had a severe allergic reaction to the company’s drug and required hospitalization. At the end of Year 2, the company’s attorneys estimated a 62% chance the company would need to make payments in the range of $2,500 to $7,000 to settle each claim, with all amounts in that range being equally likely. At the end of Year 3, while none of the cases had been resolved, the company’s attorney now estimated an 80% probability the company would be required to make payments in the range of $3,000 to $10,000 to settle each claim with all amounts in that range being equally likely. In Year 4, 400 claims were settled at a total cost of $2.5 million. Based on this experience, the company believes 30% of the remaining cases will be…
- On December 1, 2019, AwakcAllNight Inc. sells 5,000 super caffeinated candy bars to Campus Grocers. The candy bars sell for 3 per bar. In addition, AwakcAllNight pays Campus Grocers a 900placement fee to ensure that its candy bars are always stocked prominently by the cash register. The 900 is paid at the end of each month based on the results of random inspections of Campus Grocers by AwakcAllNight to ensure that the terms of the contract are being followed. Required: 1. Determine the transaction price for Awake AllNights revenue contract. 2. Prepare AwakeAllNights journal entries to recognize sales revenue and pay Campus Grocers the placement fee.Tim Navholtz needs a $20,000 renters insurance policy and has selected the $500,000 liability with $1,000 deductible. The insurance company has determined his credit is excellent and has given him the "good" credit rate. If he adds an endorsement of $0.85/$100 to ensure $12,600 of jewelry, $20/year for the options of identity theft/protection and $75/year for sewer/sump pump backup protection for his basement, find his annual premium using the given table. Click the icon to see a hypothetical table of Estimated Annual Renters Insurance Premium Rates. The annual premium is $. (Simplify your answer. Type an integer or a decimal.)help me