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AnnZ [28]
3 years ago
15

Yuri owns just one ship, he calls it Previt. The ship is worth $25 million dollars. If the ship sinks, Yuri loses $25 million. T

he probability that it will sink is .02. Yuri's total wealth, including the value of the ship is $50 million. He is an expected utility maximizer with utility U(W) equal to W2. What is the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship
Business
1 answer:
alexandr1967 [171]3 years ago
5 0

Answer:

$745,000

Explanation:

Calculation to determine the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship

First step is to calculate the Expected Utility (√W)

Expected Utility = (98% x √$25,000,000) + (2% x √$0)

Expected Utility = $4,900

Second step is to calculate the Fair premium of insurance policy using this formula

Fair premium of insurance policy = Probability of loss x Size of loss

Let plug in the formula

Fair premium of insurance policy = 2% x $25,000,000

Fair premium of insurance policy = $500,000

Third step is to calculate the Maximum premium using this formula

Maximum premium = Maximum utility - Expected Utility²

Let Plug in the formula

Maximum premium = $25,000,000 - $4,900²

Maximum premium = $25,000,000 - $24,010,000

Maximum premium= $990,000

Now let calculate the Maximum amount willing to pay using this formula

Maximum amount willing to pay = (Fair premium + Maximum premium) / 2

Let plug in the formula

Maximum amount willing to pay= ($ 500,000 + $990,000) / 2

Maximum amount willing to pay=$1,490,000/2

Maximum amount willing to pay= $745,000

Therefore the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship is $745,000

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The production plant for Ace Manufacturing has been located in the same place for over 100 years. It has just completed its new
Reptile [31]

Answer:

True

Explanation:

A single use plan is basically a one time business transaction that is supposed to take place only once and should not be repeated in the future.  In this case, the production plant has been used for more than 100 years, but once it is sold, its history and the company should no longer have any type of relationship with it.

7 0
3 years ago
Creative Sound Systems sold investments, land, and its own common stock for $32.0 million, $14.8 million, and $39.6 million, res
Studentka2010 [4]

Answer:

Creative Sound Systems should report $18,800,000 as net cash flows from financing activities

Explanation:

Cash flow Financing activities are the funds that the business acquire or paid to finance its main activities, these involve borrowing and repaying short-term loans, long-term loans and other long-term liabilities.

From the question, Cash inflow from Issue of common share and Cash outflow from purchase of treasury stock are the only recognizable Financing activities

Particulars                                                                Amount

Cash inflow from Issue of common share              $39,600,000

Cash outflow from purchase of treasury stock     -$20,800,000

Net cash flows from financing activities              $18,800,000

7 0
3 years ago
Last year Lawn Corporation reported sales of $115,000 on its income statement. During the year, accounts receivable decreased by
julia-pushkina [17]

Answer:

$125,000

Explanation:

Particulars                                                     Amount

Sales revenue                                            $115,000

Add: Accounts receivable decrease        <u>$10,000</u>

Cash Receipt from customers                 <u>$125,000</u>

The sales revenue adjusted to a cash basis for the year is $125,000.

4 0
2 years ago
The percent change in multifactor productivity if Fok can reduce the energy bill by ​$1,000 per day without cutting production o
marishachu [46]

Answer:

The answer is "2.45%".

Explanation:

The answer of option c:

Reduce power by 950 dollars:

In this question it will need to once again take the latest energy cost for analytical hierarchical productivity.  

→ Total Input  = 400 \times  12+21000 \times 1 +(5000-950)+10000

                     = 4800 +21000 + (4050)+10000  \\\\                       = 25800+4050+10000 \\\\                       = 39850\\

Consumer rates  = \frac{1,000}{39,850}

                            =0.0250

Initial efficiency multi-factor= 0.0245

\to \text{percentage  changes} = \frac{\text{New Multi Factor Productivity - Previous Multi-Factor Productivity}}{\text{Originbal Multi-Factor Productivity}}  

                                   = \frac{(0.02450.0251)}{0.0245}\\\\ = 2.45 \ \  \%

3 0
3 years ago
A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?
GREYUIT [131]

Answer:

B. It would not shift the curve; it would be represented by moving from a point inside the curve toward the curve.

Explanation:

Here the falling in unemployment represents that there is a movement with respect to the resources that are fully employed.

In this the unemployment means that it could be occured inner side of the PPF but if there is an increase, so the point of the production would be moved inner of the PPF to the PPF

Therefore the option B is correct

6 0
3 years ago
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