Suppose a man has a probability of 0.00194 of dying in the next four years. An...

Suppose a man has a probability of 0.00194 of dying in the next four years. An insurance company charges $500 for a $100,000 life insurance four-year term policy to the man. That is, if the man dies within four years, the company must pay his estate $100,000; if he lives, the company pays nothing. Find the expected value of the profit for the company on this policy.

Solutions

Expert Solution

orchestra answered 1 year ago

Next > < Previous

Related Solutions

A) A 40-year-old man in the U.S. has a 0.24% risk of dying during the next...

A) A 40-year-old man in the U.S. has a 0.24% risk of dying during the next year . An insurance company charges $250 per year for a life-insurance policy that pays a $100,000 death benefit. What is the expected value for the person buying the insurance? Round your answer to the nearest dollar. Expected Value: $ for the year B)If you randomly select a letter from the phrase "Ichiro Suzuki is at the top of the lineup," what is the...

A 40-year-old man in the U.S. has a 0.245% risk of dying during the next year...

A 40-year-old man in the U.S. has a 0.245% risk of dying during the next year . An insurance company charges $260 per year for a life-insurance policy that pays a $100,000 death benefit. What is the expected value for the person buying the insurance? Round your answer to the nearest dollar. Expected Value:

A stock will pay no dividends for the next 3 years. Four years from now, the...

A stock will pay no dividends for the next 3 years. Four years from now, the stock is expected to pay its first dividend in the amount of $2.1. It is expected to pay a dividend of $2.9 exactly five years from now. The dividend is expected to grow at a rate of 7% per year forever after that point. The required return on the stock is 12%. The stock's estimated price per share exactly TWO years from now, P2...

A stock will pay no dividends for the next 3 years. Four years from now, the...

A stock will pay no dividends for the next 3 years. Four years from now, the stock is expected to pay its first dividend in the amount of $2.1. It is expected to pay a dividend of $2.9 exactly five years from now. The dividend is expected to grow at a rate of 5% per year forever after that point. The required return on the stock is 14%. The stock's estimated price per share exactly TWO years from now, P2...

Branson, Inc. has made a commitment to pay the following dividends over the next four years:...

Branson, Inc. has made a commitment to pay the following dividends over the next four years: $7, $13, $18, and $3.25. At the end of this four year period, the firn has further commited to grow the dividend indefinitiely at a constant 5 percent growth rate. If you require a return on this stock of 8.4 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

An investment project has annual cash inflows of $5,300, $6,400, $7,200 for the next four years,...

An investment project has annual cash inflows of $5,300, $6,400, $7,200 for the next four years, respectively, and $8,500, and a discount rate of 20 percent. What is the discounted payback period for these cash flows if the initial cost is $8,000?

Your investment account is expected to earn a 5% return for next two years and then 8% return for next four years after that.

a. Your investment account is expected to earn a 5% return for next two years and then 8% return for next four years after that. You need to withdraw $750 from this account at the end of each month for next six years. After last withdrawal at end of six years, nothing remains in your account. how much is deposited in this account today? (Assume monthly compounding)b. You just bought a condo for $250,000 and paid $50,000 as down payment....

Studies indicate that the probability that a married man votes is 0.45, the probability that a...

Studies indicate that the probability that a married man votes is 0.45, the probability that a married woman votes is 0.40, and the probability that a married woman votes given that her husband does is 0.60. Compute the following probabilities: (a) Both a man and his wife vote. (b) A man votes given that his wife does.

The zither industry will have a rapid expansion in the next four years. With the brand...

The zither industry will have a rapid expansion in the next four years. With the brand name recognition that PUTZ brings to bear, we feel that the company will be able to sell 7,000, 7,700, 8,300, and 6,600 units each year for the next four years, respectively. Again, capitalizing on the name recognition of PUTZ, we feel that a premium price of $520 can be charged for each zither. Because zithers appear to be a fad, we feel at the...

A firm expects to pay dividends at the end of each of the next four years...

A firm expects to pay dividends at the end of each of the next four years of $2.00, $1.50, $2.50, and $3.50. Afterwards, dividends are expected to level off at 7%. If you require a 16% percent rate of return, how much should you be willing to pay for this stock today? Question options: 1) $41.61 (THIS OPTION IOS WRONG) 2) $29.35 3) $35.01 4) $28.51 OPTION 1 IS WRONG

Subjects