Question
In: Finance
Calculate the expected present value of Coverage A and Coverage B. Clearly identify which option is...
Calculate the expected present value of Coverage A and Coverage B. Clearly identify which option is better for the buyer of insurance.
Expected losses:
10 losses of $10000
6 losses of $15000
3 losses over $15000
Interest rate 5%
Coverage A
Premium $75,000
Deductible $10,000
Coverage B
Premium $35,000
Deductible $15,000
Solutions
Expert Solution
The best term insurance is one that offers the highest sum assured at the lowest possible monthly premium.
Since time period is not mentioned here, calculation is based on 1 year. From the below calculation NPV is higher in coverage B. so, suggest to go with coverage B.
The formula for NPV varies depending on the number and consistency of future cash flows. If there’s one cash flow from a project that will be paid one year from now, the net present value is calculated as follows:
In this equation:
i = Required return or discount rate
t = Number of time periods
jeff jeffy answered 1 year agoRelated Solutions
Calculate the present value of a stock if this stock is expected to pay $2.5 annual...
Calculate the present value of a stock if this stock is expected
to pay $2.5 annual dividend in next 3 years, and it is expected to
pay $3.5 annual dividend for year 4 to year 6. In year 7 and
thereafter it pays $5 constant dividend forever. The interest rate
is 8%. Please provide excel formula and explain your step-by-step
calculation in your answer.
Calculate the present value of a stock if this stock is expected to pay $10.60 dividend...
Calculate the present value of a stock if this stock is expected
to pay $10.60 dividend in the next three years and then $15 for
year 4 to year 6, and in year 7 and thereafter it pays $20 constant
dividend forever. Assume investors opportunity cost of investment
is 10%. provide excel formula in your answer and briefly explain
the steps in your calculations
Calculate the present value of a stock if this stock is expected to pay $2.5 annual...
Calculate the present value of a stock if this stock is expected
to pay $2.5 annual dividend in the next 3 years, and it is expected
to pay $3.5 annual dividend for year 4 to year 6. In year 7 and
thereafter it pays $5 constant dividend forever. The interest rate
is 8%. Please provide excel formula and explain your step-by-step
calculation in your answer.
1. Calculate the present value of the company based on the given interest rate and expected...
1. Calculate the present value of the company based on the given
interest rate and expected revenues over time. 2. Suppose the risk
of the company changes based on an internal event. Recalculate the
present value of the company. 3. Suppose that a potential buyer has
offered to buy this company in five years. Based on the present
value you calculated above, what would be a reasonable amount for
which the company should be sold at that future time? B....
Use the B-S OPM to calculate the value of a call option with the following data:...
Use the B-S OPM to
calculate the value of a call option with the following data:
Price of the
underlying stock = $30; strike price = $35; risk-free rate of
return = 5%; variance of the stock returns = .25; and time to
expiry of the call option is 4 months
Please show your
work!
To determine which enantiomer of the minor component is present, calculate the expected rotation for each...
To determine which enantiomer of the minor component is present,
calculate the expected rotation for each possible scenario.
Use the published specific rotation values for the pure enantiomers
of limonene and carvone, along with the mole % of limonene and
carvone determined:
limonene mole % = 62.38% Carvone mole %
=37.62% specific rotation of a mixture= -82.79 levorotatory the
major component Limonene must be levorotatory
Example: the specific rotation of a mixture of A and B was found
to be...
Calculate NPV: Evaluate the two options using NPV analysis and clearly identify which of the two...
Calculate NPV: Evaluate the two options using
NPV analysis and clearly identify which of the two alternatives
results in a higher valuation for Rio Tinto. Include a brief
commentary of your analysis.
Option 1: Building a “Crusher” and 13-kilometre
Conveyor The construction and installation of a new “Crusher” and
13-kilometre conveyor will cost $24 million. In addition, an ANFO
facility will also need to be constructed at a cost $8.2 million.
This facility will need to be supplied with slurry...
Present value For the case shown in the following table, calculate the present value of the...
Present value For the case shown in the following table,
calculate the present value of the cash flow, discounting at the
rate given,and assuming that the cash flow is received at the end
of the period noted. (Click on the icon here in order to copy the
contents of the data table below into a spreadsheet.)
Single cash flow- $148,000
discount rate- 13%
end of period (years) - 7
5. Present value To find the present value of a cash flow expected to be paid...
5. Present value
To find the present value of a cash flow expected to be paid or
received in the future, you will the future value cash
flow by (1 + I)NN.
What is the value today of a $12,000 cash flow expected to be
received eight years from now based on an annual interest rate of
6%?
$9,411
$6,023
$11,670
$7,529
Your broker called earlier today and offered you the opportunity
to invest in a security. As a friend,...
(a) Calculate the net present value (NPV) of a project which requires an initial investment of...
(a) Calculate the net present value (NPV) of a project which
requires an initial investment of $243,000 and it is expected to
generate a cash inflow of $58,000 each month for 12 months. Assume
that the salvage value of the project is zero. The target rate of
return is 12 % per annum.
(b) An initial investment of $8,720 thousand (i.e. × 1,000) on
plant and machinery is expected to generate cash inflows of $3,411
thousand, $4,070 thousand, $5,824 thousand...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- D. Explain what it means for recommendations to be specific and actionable. E. Discuss how charts...
- Capital Toys’ management is considering eliminating product A, which has been showing a loss for several...
- Computer Networks IT 210 Please Use your own words . sorry No handwriting no copy paste...
- The Coronavirus will obviously impact the economy of big organizations like FIFA or the NBA but...
- Question: what is the difference between rights of assertion and observation assertion. Include which financial statements...
- how to read a csv file in php and make a html table? I can't use...
- ABC Inc. is evaluating a project that will increase annual sales by $230,000 and annual cash...
ADVERTISEMENT