William pays $500 every 6 months as a premium on his car insurance with collision coverage. If William were to get in an accident and file a claim, he would pay $750 as a deductible and the insurance would cover the cost of repairs to the vehicles. When you file a claim against your insurance, your next set of premiums typically rise in the event it were to happen again, it brings in more money to the insurance agency. Since William’s car is $700 to fix and the other drivers car is $1,100 to fix if William does not file a claim with his insurance, he will pay an out-of-pocket amount of $1,100 to have the other car repaired.
Answer:
Cost Volume Profit Analydis
Explanation:
Cost Volume Profit Analysis is also known as Break-Even Analysis. This is the application of marginal costing and seeks to study the relationship between costs volume and profits at different levels and can be used as a useful guide for short term planning and decision making. Cost Volume Profit Analysis is a technique that examines changes in profits in response to changes in sales volume, costs and prices.
Answer:
The rate of return on the risky asset is 16% and on treasury bill is 6% and we need a return of (1100-1,000)/1000= 10% or 0.1
If we think of x as the percentage investment in risky asset and 1-x as the investment in non risky asset we can mathematically find what proportion we need to invest in each asset to get this return.
16x+ 6(1-x)=10
16x+6-6x=10
10x=4
x=4/10
x= 0.4
This equation tells us that we should invest 40% in risky assets and 1-x which is 60% in treasury bills. We can test our answer by putting these values and see if the return is 10 %
(0.4*16)+(0.6*6)= Rate of return
Rate of return=10%
10% of 1000 = 100
100+1000=$1100
Explanation:
Price bundling.
This combines multiple items for a single, discounted price. Even though the combined price is lower, it actually can help profits and sales because it encourages customers to buy more than they otherwise would.