Answer:
A) The amount of the premium in fair insurance policy that replaces Beths car, must be equal to the probability or expectation of claim of car theft.
Therefore, the Premium amount = 20000 x (1/200)
= 20000 (0.005)
= $100
B) If an Insurance company charges 0.6% for replacing a stolen car, then the policy will cost beth:
20000* 0.6%
= 12,000/100
= $ 120
C) To be risk-neutral means to be indifferent to the risk. This means that Beth would be indifferent. She most likely will be focused on maximizing value for money. In other words, she will NOT pay for the insurance policy in part b because part A provides her with the exact (or fair) premium for her insurance.
D) The moral hazard problem is this, people tend to become more careless with an insurance policy in place. This moral hazard arises form the knowledge that there is an insurance policy that caters to their risks.
As a matter of practice, therefore, insurance companies factor this increased risk into their premiums. Where the premium was supposed to be $100, they may charge $120.
In summary, it means that Beth most likely will move from becoming risk neutral to becoming (to a certain degree) more risk loving.
Cheers!
Answer:
A) FMEA
Explanation:
the project is moced developing the make list
I believe that first one should add the $175,000 to the $5000 = $180000 - $3000=$177,000/75,000= 236% of assets would be the rate of return based on the assets which is a pretty high rate of return and means the assets are being very wisely used.
Answer:
Dr Depot $639,700
Cr Cash $639,700
Dr Depot $40,070
Cr Asset retirement obligation $40,070
Explanation:
Sandhill Company Journal entries
Dr Depot $639,700
Cr Cash $639,700
Dr Depot $40,070
Cr Asset retirement obligation $40,070
Answer:
May
Dr Work in Process $35,500
Cr Wages Payable $35,500
Explanation:
Preparation of the Journal entry to record the flow of labor costs into production during May
Based on the information given the Journal entry to record the flow of labor costs into production during May will be :
May
Dr Work in Process $35,500
Cr Wages Payable $35,500
Calculated as:
Labor costs = (740*20)+(900*23)
Labor costs=14,800+20,700
Labor costs=$35,500
