Car insurance contracts are usually semiannual. The insurance company usually gives you a choice: pay the...

Car insurance contracts are usually semiannual. The insurance company usually gives you a choice: pay the whole semiannual amount up front, or pay 6 equal monthly installments at the beginning of each of the next 6 months. Your insurance quote is for an up front amount is $542, or 6 monthly installments of $132 at the start of each month.

If the annual rate of return you'd be earning on this money is 2.5% APR, how much better off will you be at the end of 6 months if you pay up front? (Note this can be a negative number if you'll actually be worse off.)

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Motors Repair Company contracts to sell a car to Nikki for $3,500. Nikki gives Motors Repair...

Motors Repair Company contracts to sell a car to Nikki for $3,500. Nikki gives Motors Repair a worthless check for the price. Nikki assigns her right to the car to Opie. If Motors Repair refuses to deliver the car to Opie and Opie sues, can Motors Repair raise Nikki’s fraud as a defense against delivery of the car to Opie? Explain.

Insurance contracts are usually obtained through an agent, who works as an independent contractor. True/False? To...

Insurance contracts are usually obtained through an agent, who works as an independent contractor. True/False? To deem an agreement a per se violation of antitrust law, a court must determine whether the agreement actually injures competition. True/False?

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 is trying to sell you an investment policy that will pay you and...

An insurance company is trying to sell you an investment policy that will pay you and your heirs $100,000 per year forever. If the required return on this investment is 6.5 percent, how much will you pay for the policy? A. $1,538,461.54 B. $925,925.93 C. $1,265,455.25 D. $2,627,950.42

5. You have insurance coverage for drugs. The insurance company will pay 50% of the price...

5. You have insurance coverage for drugs. The insurance company will pay 50% of the price charged by the pharmacy. You went to the store in February, 2019. Due to a very snowy and bad winter, you stock your medicine cabinet with over the counter cold medication. The price of cold medicine was $10 per bottle. You bought 3 bottles for the month. Next month, you found that the pharmacy had raised the price to $12 per bottle. In addition,...

A car insurance company has determined that the mean annual car insurance cost for a family...

A car insurance company has determined that the mean annual car insurance cost for a family in the town of Watlington is $1716. A researcher wants to perform a hypothesis test to determine whether the mean insurance cost for a family in the town of Putford is higher than this. The mean insurance cost for a random sample of 32 families in Putford was $1761. At the 10% significance level, do the data provide sufficient evidence to conclude that the...

A car insurance company has determined that the mean annual car insurance cost for a family...

An insurance company quotes you a policy that requires you to pay $800.00 at the beginning...

An insurance company quotes you a policy that requires you to pay $800.00 at the beginning of each month for the following year. If you can earn 5.16% APR with monthly compounding on your investments, what is the value of this policy in today's dollars? (express as positive number)

Pat contracts with an Ajax Insurance Company agent for a $50,000 ordinary life insurance policy.

Fact Pattern #1:Pat contracts with an Ajax Insurance Company agent for a $50,000 ordinary life insurance policy. The application form is filled in to show Pat's age as 32. In addition, the application form asks whether Pat has ever had any heart ailments or problems. Pat answers no, forgetting that as a young child he was diagnosed as having a slight heart murmur. A policy is issued. Three years later, Pat becomes seriously ill and dies. A review of the...

A company car is in a wreck and the company expects to have to pay a...

A company car is in a wreck and the company expects to have to pay a substantial sum to persons who were injured. State what type of disclosure, if any, is required under each of the following two circumstances (you can search the FARS database on the type of disclosure). For each circumstance, state your findings (citing the source) and then write a brief summary of what your findings mean. In both cases assume the company’s year-end is December 31....

Subjects