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dezoksy [38]
2 years ago
9

. Due to a car accident you receive a settlement from insurance of $50 a month for the next ten years. What is that worth to you

today, assuming a 3% inflation rate?
Business
1 answer:
pishuonlain [190]2 years ago
7 0

Answer:

Worth  of Insurance settlement $426.5

Explanation:

Present value of Insurance settlement = P [ ( 1 - ( 1+r )^-n ) / r ]

Present value of Insurance settlement = 50 [ ( 1 - ( 1 + 3% )^-10 ) / 3%]

Present value of Insurance settlement = 50 [ ( 1 - ( 1 + 0.03 )^-10 ) / 0.03]

Present value of Insurance settlement = 50 [ ( 1 - ( 1 .03 )^-10 ) / 0.03]

Present value of Insurance settlement = 50 [ ( 1 - ( 1 .03 )^-10 ) / 0.03]

Present value of Insurance settlement = 50 [ ( 1 - 0.7441 ) / 0.03]

Present value of Insurance settlement = 50 [ 0.2559 / 0.03]

Present value of Insurance settlement = 50 x 8.53

Present value of Insurance settlement = 426.5

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The correct answer is: "I would recommend her not to increase the price, because with an elastic demand function this will cause a great decrease in the quantity demanded by consumers".

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2 years ago
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3 0
3 years ago
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solniwko [45]

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6 0
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balandron [24]

Answer:

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