Flounder’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $86...

Flounder’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $86 on January 2, 2017. In addition, Flounder will receive an additional commission of $10 each year for as long as the policyholder does not cancel the policy. After selling the policy, Flounder does not have any remaining performance obligations. Based on Flounder’s significant experience with these types of policies, it estimates that policyholders on average renew the policy for 4.5 years. It has no evidence to suggest that previous policyholder behavior will change.

Determine the transaction price of the arrangement for Flounder, assuming 100 policies are sold.

Transaction Price. $13,100

Determine the revenue that Flounder will recognize in 2017.

Revenue ___________????

Expert Solution

ekkarill92 answered 2 years ago

Coronado’s Agency sells an insurance policy offered by CapitalInsurance Company for a commission of $103...

Coronado’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $103 on January 2, 2020. In addition, Coronado will receive an additional commission of $12 each year for as long as the policyholder does not cancel the policy. After selling the policy, Coronado does not have any remaining performance obligations. Based on Coronado’s significant experience with these types of policies, it estimates that policyholders on average renew the policy for 4.5 years. It has no...

An insurance company sells an insurance policy for $1000. If there is no claim on a...

An insurance company sells an insurance policy for $1000. If there is no claim on a policy, the company makes a profit of $1000. If there is a claim on a policy, theȱȱcompany faces a large loss onȱȱthat policy. The expected value to the company, per policy, is $250. Which of the following statements is (are) true? A: The most likely outcome on any single policy is a profit for the company of $250. B: If the company sells only...

Suppose a life insurance company sells a $290,000 a year term life insurance policy to a...

Suppose a life insurance company sells a $290,000 a year term life insurance policy to a 20-year-old female for $200. The probability that the female survives the year is 0.999634. compare and interpret the expected value of this policy to the insurance company. the expected value is $___ (round to two decimal places as needed)

suppose a life insurance company sells a $240,000 one year term life insurance policy to a...

suppose a life insurance company sells a $240,000 one year term life insurance policy to a 19 year old female for $270. the probability that the female survives the year is .999522. compute and interpret the expected value if this policy to the insurance company. the expected value is $______

Suppose a car insurance company sells you an insurance policy that “gets you legal” and costs...

Suppose a car insurance company sells you an insurance policy that “gets you legal” and costs $7.50 per month. What is the problem with this insurance policy? What does it mean to have only 25/50/25 liability coverage for the following situations (what could the insurance company pay)? a. If you hit someone (you are at fault)? b. If someone hits you (they are at fault) and is insured? c. If someone hits you (they are at fault) and is not...

An insurance company sells a $17,500, three-year term life insurance policy to an individual for $675....

An insurance company sells a $17,500, three-year term life insurance policy to an individual for $675. Find the expected return for the company if the probability the individual will live for the next three years is 0.99. (Round your answer to the nearest cent.)

An insurance company sells a $16,000, eight-year term life insurance policy to an individual for $1,620....

An insurance company sells a $16,000, eight-year term life insurance policy to an individual for $1,620. Find the expected return for the company if the probability the individual will live for the next eight years is 0.93. (Round your answer to the nearest cent.)

Geneva Healthcare Company (GHC) sells annual health insurance for $1,050 each. The company uses commission-based selling...

Geneva Healthcare Company (GHC) sells annual health insurance for $1,050 each. The company uses commission-based selling and the quota per salesperson is 40 insurances per month. IF GHC has 3 salespersons who are new and are expected to hit 50% of the monthly quota, 2 others who can hit 75% of the quota, and 5 experienced salespeople who can achieve 100% of the quota, then what is this month’s expected level of revenue? Show your calculations. (2 points)

A life insurance company sells a $150,000 one year term life insurance policy to a 21-year...

A life insurance company sells a $150,000 one year term life insurance policy to a 21-year old female for $150. The probability that the female survives the year is .999724. Find the expected value for the insurance company.

An insurance company sells a policy to airline passengers. If a flier misses the purchased flight...

An insurance company sells a policy to airline passengers. If a flier misses the purchased flight due to medical reasons, the policy gives $300 to the flier. Otherwise, there is no return. Records show that about 5% passengers miss flight due to illness. You buy the policy for your next flight. Select the correct statement. (A) The expected value of the amount of money you receive is $15. (B) The variance of the amount of money you receive is $4275....

Question