This assignment covers the material in: 2.1 Simple Interest 2.2 Compound Interest 2.3 Annuities 2.4 Amortization

33A. Just before his first attempt at bungee jumping, John decides to buy a life insurance policy. His annual income at age 30 is $35,000, so he figures he should get enough insurance to provide his wife and new baby with that amount each year for the next 35 years. If the long-term interest rate is 6.6%, what is the present value of John's future annual earnings? (Round your answer to the nearest cent.)
_______$

Rounding up to the next $50,000, how much life insurance should he buy? (Round your original answer to the nearest $50,000).

_______$

B. A MasterCard statement shows a balance of $540 at 13.6% compounded monthly. What monthly payment will pay off this debt in 1 year 9 months? (Round your answer to the nearest cent.) ______$

The Blue Sky Flight Insurance Company insures passengers against air disasters, charging a prospective passenger $20 for coverage on a single plane ride. In the event of a fatal air disaster, it pays out $300,000 to the named beneficiary. In the event of a nonfatal disaster, it pays out an average of $75,000 for hospital expenses. Given that the probability of a plane's crashing on a single trip† is 0.00000087, and assuming that a passenger involved in a plane crash has a 0.9 chance of being killed, determine the profit (or loss) per passenger that the insurance company expects to make on each trip. HINT [Use a tree to compute the probabilities of the various outcomes.] Should the insurance company expect a profit or loss on each trip? profit loss What is the value of the profit (or loss)? (Round your answer to the nearest cent.)

A national survey of insurance offices was taken, resulting in a random sample of 253 companies. Of these 253 companies, 181 responded that they were going to purchase new software for their offices in the next year. Construct a 90% confidence interval to estimate the population proportion of insurance offices that intend to purchase new software during the next year.

Suppose you obtain a 20-year mortgage loan of $197,000 at an annual interest rate of 8.2%. The annual property tax bill is $978 and the annual fire insurance premium is $491. Find the total monthly payment for the mortgage, property tax, and fire insurance. (Round your answer to the nearest cent.)

A 55-year old buys a continuous increasing whole life insurance. The benefit payable at the moment of death (time t) is equal to bt=1000t.

Mortality is DeMoivre, with ω=100;δ=0.06

Find the Net Single Premium of this insurance.

People think that insurance premiums are often too high and not worth the money, however, when an accident occurs, even something as serious as death, a car accident, a house fire, etc. people sometimes lose everything. Discuss with your classmates how you feel about car, life and property insurance that you learned about in this unit. Have you had a situation where you or someone you know did not have insurance and wish they had? Or perhaps you were harmed by someone without insurance in some way. Do you feel this unit helped you understand this topic better and possibly reinforce what you already knew?

Jules owns a Van Gogh masterpiece worth $5 million. There is a 1% chance the painting will get stolen, leaving Jules with nothing.

(a) What is the expected value of this gamble?

(b) What is the minimum insurance premium an insurance company would charge to fully insure the painting against theft?

(c) Jules's certainty equivalent for this risky situation is $4,900,000. What is the maximum insurance premium he'd be willing to pay for full insurance?

A company offers health insurance to its employees. The insurance pays continuous premiums at the rate of $12,000/year whenever the employee is sick, and nothing otherwise. Suppose that a typical employee gets sick on average every 4 months ,and when sick remains so for an average of 1/2-months. The company constructs an appropriate continuous-time Markov chain to model this situation.

(a) Suppose an employee is healthy today. Find the total expected benefits that she will receive over the next year.

On September 1, 2019, Jay Walker Company purchased a one-year insurance policy for $420. The correct adjusting entry on December 31, 2019, is:

Multiple Choice

• debit Insurance Expense $140; credit Prepaid Insurance $140

• debit Insurance Expense $315; credit Prepaid Insurance $315

• debit Prepaid Insurance $35; credit Insurance Expense $35

• debit Prepaid Insurance $420; credit Insurance Expense $420

Which of the following statements are correct (Select all that apply): Select one or more: A. A balance sheet reports on investing and financing activities. B. An income statement reports on financing activities. C. The statement of equity reports on changes in the accounts that make up equity. D. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time. E. A balance sheet reports on a company's assets and liabilities over a period of time.

An aircraft factory manufactures airplane engines. The unit cost C (the cost in dollars to make each airplane engine) depends on the number of engines made. If x engines are made, then the unit cost is given by the function C(x)=0.3x2-156x+37,629 .What is the minimum unit cost? Do not round your answer.

The Clyde Tunnel, which passes beneath the River Clyde in Glasgow, is 762 m long. 93 fire engines can fit end to end along its length.

Q. Find the length of one fire engine, in metres, giving your answer to one decimal place?

Here is a student’s attempt at a solution, with the correct numerical result:

762 = 762/93 = 8.2 = length

(a)With reference to good mathematical communication (GMC), describe three aspects of the student’s solution that could be improved. [6] (b) Write out your own solution to this question.