Albert is worried that his entire potato plantation which is expected to yield P400,000 income will...

Albert is worried that his entire potato plantation which is expected to yield P400,000 income will be totally devastated by bad weather conditions. He obtained a P300,000 crop insurance cover for P30,000. Just before harvest, a rare frost totally destroyed Albert's plantation. The insurance company paid the policy proceeds.

Compute the total return on capital for Albert. Show your computations.

Expert Solution

Expected profit = 4,00,000

Earned profit = 3,00,000

Insurance amount recieved= 30,000

Total return on capital= Earned profit+Other additional profit earned(insurance amount)

=3,00,000+30,000=3,30,000

Profit/loss on investment=Expected profit-earned profit

=4,00,000-3,30,000(3,00,000+30,000)

Loss on investment =70,000

ekkarill92 answered 2 years ago

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Albert is worried that his entire potato plantation which is expected to yield P400,000 income will...

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