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Alja [10]
3 years ago
14

. There is an 80% probability that Tom will be in good health during the year and incur only $200 in medical expenses, but there

is a 20% probability that he will be ill and incur $20,000 in medical expenses. If an insurance company charged Tom an actuarially fair premium, how much would Tom pay for health insurance
Business
1 answer:
zaharov [31]3 years ago
5 0

Answer:

The  Actuarially Fair Premium that Tom have to pay for hid Health Insurance is $4,160

Explanation:

To compute the amount that Tom have to pay for Health Insurance is;

Actuarially Fair Premium = (Probability of actuality ill × Payments incurred) + (Probability of not actuality ill × Payments incurred)

Actuarially Fair Premium = (20% x $20,000) + (80% x $200)

Actuarially Fair Premium = $4,000 + $160

Actuarially Fair Premium  = $4,160

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A dam is being built that will cost $500,000. The dam will cost $20,000 per year to operate and will require a maintenance expen
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Answer:

The capitalized cost will be "784,592".

Explanation:

The given values are:

Initial cost = $500,000

Annual operating cost = $20,000

Interest, i = 12% i.e., 0.12

Effective Two year interest rate, i₂ = (1.12)^2 - 1

                                                         = 0.2544

As we know,

Capitalized \ cost = Initial \ cost + \frac{Annual \ operating \ cost }{i}  + \frac{Bi-annual \ maintenance \ cost}{i_{2}}

Now on putting the estimated values in the above expression, we get

⇒                       =500,000+\frac{20,000 }{0.12} +\frac{30,000}{0.2544}

⇒                       = 500000 + 166667 + 117925

⇒                       = 784,592

So that the above is the right answer.

4 0
3 years ago
10. HHH Inc. reported $12,500 of sales and $7,025 of operating costs (including depreciation). The company had $18,750 of invest
kakasveta [241]

Answer:

Explanation:

Economic value added=NOPAT-(CAPITAL * WACC)

NOPAT=(SALE - OPERATING COST)(1-TAX SALE)

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-5475*0.60

=$3285

EVA = $3285 - (18750 * 9.5%)

= $3285 - %1781.25

=$1503.75

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