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strojnjashka [21]
3 years ago
12

Karen and Mike currently insure their cars with separate companies, paying $400 and $600 a year. If they insured both cars with

the same company, they would save 15 percent on the annual premiums. What would be the future value of the annual savings over 10 years based on an annual interest rate of 3 percent
Business
1 answer:
Papessa [141]3 years ago
4 0

Answer:

$1,720

Explanation:

Total annual premium for both Karen and Mike = $400 + $600 = $1,000

If they insured both cars with the same company, they would save 15% on the annual premiums -> the annual saving = 15% * $1,000 = $150

We use formula FV to calculate the future value of annual payment:

= FV(rate, number of payment, - payment) = FV(3%,10,-150) = $1,720

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3 years ago
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Justus Motor Co.has a WACC of 11.50%, and its value of operations is $25.00 million. Justus's free cash flow is expected to grow
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