Answer:
Percentage total return = 0.1147 or 11.47%
Explanation:
Below is the calculation for a percentage of total return:
The initial price of share = $88
Dividend amount = $2.10
Ending price of share = $96
Use the below formula to find the percentage return:
Percentage total return = [(Ending price - initial price) + Dividend amout] ÷ Initial price
Percentage total return = [(96 - 88) + 2.10] / 88
Percentage total return = 0.1147 or 11.47%
After a careful analysis, managers at Haremon's have concluded that 20 customers per hour need to check out. If the sole cashier can check out 25 customers per hour, what is the cashier's (implied) utilization?
Answer:
Haremon Corporation
The cashier's (implied) utilization is:
= 125%.
Explanation:
a) Data and Calculations:
Billable customers per hour = 25
Estimated number of customers that the cashier is expected to check out per hour = 20
Therefore, the cashier's (implied) utilization is the number of billable customers per hour divided by the total number of customers that the cashier is expected to check out per hour (x 100)
= 25/20 * 100 = 125%
Sunland Co. uses the retail inventory method. The following information is available for the current year. Cost Retail Beginning inventory $ 318000 $494000 Purchases 1240000 1720000 Freight-in 23000 — Employee discounts — 8500 Net markups — 66000 Net markdowns — 86000 Sales revenue — 1620000 If the ending inventory is to be valued at approximately lower of average cost or market, the calculation of the cost ratio should be based on cost and retail of
Answer:
Sunland Co.
The calculation of the cost ratio should be based on cost and retail of $1,581,000 and $2,288,500 respectively.
Explanation:
a) Data and Calculations:
Cost Retail Cost to Retail Ratio
Beginning inventory $ 318,000 $494,000
Purchases 1,240,000 1,720,000
Freight-in 23,000 —
Employee discounts — 8,500
Net markups — 66,000
Goods available for sale $1,581,000 $2,288,500 69.08%
Less:
Net markdowns — 86,000
Sales revenue — 1,620,000
Estimated ending Inventory at retail $582,500
Estimated ending Inventory
at cost $402,391 ($582,500 * 69.08%)
Calculation of the cost ratio = $1,581,000/$2,288,500 * 100 = 69.08%
What is the value today of $1,300 per year, at a discount rate of 9 percent, if the first payment is received 8 years from now and the last payment is received 25 years from today
Answer:
$6,226.52
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow year 1 to 7 = 0
Cash flow each year from year 8 to 25 = 1300
I = 9%
PV = $6,226.52
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
There will be a lower equilibrium price and quantity if
O demand increases and supply increases
o demand increases and supply decreases
O demand decreases and supply stays the same
O none of the above
Answer: demand decreases and supply stays the same
Explanation:
The equilibrium price refers to the price whereby the quantity of goods that's demanded and the quantity of goods that's supplied is equal.
On the other hand, the equilibrium quantity is gotten when the quantity of goods demanded and supplied are equal. This is gotten when the demand curve and the supply curve intersects.
It should be noted that there will be a lower equilibrium price and quantity if
In a situation whereby the demand increases and the supply remains the same, the equilibrium quantity and the equilibrium price will increase and vice versa.
Consider the following case:
Polk Software Inc. has a quick ratio of 2.00x, $32,850 in cash, $18,250 in accounts receivable, some inventory, total current assets of $73,000, and total current liabilities of $25,550. The company reported annual cost of goods sold of $100,000 in the most recent annual report.
Over the past year, how often did Polk Software Inc. sell and replace its inventory?
a. 2.86 x.
b. 4.57 x.
c. 5.03 x.
d. 8.01 x.
The inventory turnover ratio across companies in the software industry is 3.89x. Based on this information, which of the following statements is true for Polk Software Inc.?
A. Polk Software Inc. is holding more inventory per dollar of sales compared to the industry average.
B. Polk Software Inc. is holding less inventory per dollar of sales compared to the industry average.
You are analyzing two companies that manufacture electronic toys-Like Games Inc. and Our Play Inc. Like Games was launched eight years ago, whereas Our Play is a relatively new company that has been in operation for only the past two years. However, both companies have an equal market share with sales of $100,000 each. You've collected company data to compare Like Games and Our Play. Last year, the average sales for all industry competitors was $255,000. As an analyst, you want to make comments on the expected performance of these two companies in the coming year. You've collected data from the companies' financial statements. This information is listed as follows:
Data Collected (in dollars)
Like Games Our Play Industry Average
Accounts receivable 2,700 3,900 3,850
Net fixed assets 55,000 80,000 216,750
Total assets 95,000 125,000 234,600
Using this information, complete the following statements to include in your analysis.
1. Our Play has__days of sales tied up in receivables, which is much___ than the industry average. It takes Our Play___time to collect cash from its customers than it takes Like Games.
2. Like Games's fixed assets turnover ratio is___than that of Our Play. This is because Like Games was formed eight years ago, so the acquisition cost of its fixed assets is recorded at historic values when the company bought its assets and has been depreciated since then. Assuming that fixed assets prices (not book values) rose over the past six years due to inflation, Our Play paid a___amount for its fixed assets.
3. The average total assets turnover in the electronic toys industry is 1.09x, which means that $1.09 of sales is being generated with every dollar of investment in assets. A___total assets turnover ratio indicates greater efficiency. Both companies' total assets turnover ratios are___than the industry average.
Answer:
Polk Software Inc.
Over the past year, Polk Software Inc. sold and replaced its inventory?
b. 4.57 x.
Based on this information, the true statement about Polk Software Inc. is:
B. Polk Software Inc. is holding less inventory per dollar of sales compared to the industry average.
Like Games Inc. and Our Play Inc. Like Games:
1. Our Play has_14_days of sales tied up in receivables, which is much_8__ than the industry average. It takes Our Play_1.4__times to collect cash from its customers than it takes Like Games.
2.Like Games's fixed assets turnover ratio is_0.57__than that of Our Play. This is because Like Games was formed eight years ago, so the acquisition cost of its fixed assets is recorded at historic values when the company bought its assets and has been depreciated since then. Assuming that fixed assets prices (not book values) rose over the past six years due to inflation, Our Play paid a_less__amount for its fixed assets.
3. The average total assets turnover in the electronic toys industry is 1.09x, which means that $1.09 of sales is being generated with every dollar of investment in assets. A_more__total assets turnover ratio indicates greater efficiency. Both companies' total assets turnover ratios are_more__than the industry average.
Explanation:
a) Data and Calculations:
Quick ratio = 2.00x
Cash = $32,850
Accounts receivable = $18,250
Current assets = $73,000
Inventory = $21,900 ($73,000 - $32,850 + $18,250)
Current liabilities = $25,550
Cost of goods sold = $100,000
How often Polk Software Inc. sold and replaced its inventory = (Cost of goods sold/Average Inventory)
= 4.57 x ($100,000/$21,900)
Industry turnover ratio = 3.89x
Like Games Inc. and Our Play Inc. Like Games:
Sales for each firm last year = $100,000
Average sales for all industry competitors = $255,000
Information from the companies' financial statements:
Data Collected (in dollars)
Like Games Our Play Industry Average
Accounts receivable 2,700 3,900 3,850
Net fixed assets 55,000 80,000 216,750
Total assets 95,000 125,000 234,600
Days sales in inventory = Average accounts receivable/Sales * 365
For Our Play = $3,900/$100,000 * 365
= 14.235 days
Like Games = $2,700/$100,000 * 365
= 9.855 days
For the Industry = $3,850/$255,000 * 365
= 5.51 days
Fixed assets turnover:
Like Games Our Play Industry Average
Sales $100,000 $100,000 $255,000
Net fixed assets 55,000 80,000 216,750
= Sales/Net fixed assets 1.82 1.25 1.18
= $100,000/55,000 $100,000/$80,000 $255,000/$216,750
Frank works at a wealth management company and has been tasked with developing a system for aggregating client accounts into a single platform. Once the project is complete, Frank's boss asks him to give a presentation where he walks a focus group through the steps involved in setting up and using the platform. Which type of informative presentation is Frank giving?
Answer: Demonstration
Explanation:
informational presentation typically occurs in organizations and it's when information are being presented to the audience.
Since Frank will walks a focus group through the steps that are involved in setting up and using the platform, then the type of informative presentation that Frank is giving is demonstration.
4. Which of the following situations typically would result from an appreciating U.S. dollar relative to the
Canadian dollar?
A. More Canadian tourists visit the U.S.
B. Canadians purchase more U.S. goods
C. Fewer American tourists visit Canada
D. Americans purchase more Canadian made products.
Answer:
D. Americans purchase more Canadian made products.
Explanation:
The situation that would typically result from an appreciating U.S. dollar relative to the Canadian dollar is "Americans purchase more Canadian made products."
When Americans purchase more Canadian-made products, the Canadian dollar will rise or appreciate against the U.S. dollar. This is based on the principle of trade balance, whereby the monetary value of a country's imports and exports are evaluated over a given period.
In this case, the monetary value of Canadian exports against the U.S. dollar will indicate a positive trade surplus, hence, the Canadian dollar or currency will appreciate against the U.S. dollar.
Identify supply chain of your school?
Answer:Within the supply chain discipline itself, students need to learn the foundational concepts of management science and cover topics such as sourcing, selling, logistics, inventory control, quality management, and product management.
Explanation:
Julie is purchasing a home for $169,000.00. Her loan has been approved for a 30-year fixed-
rate loan at 5 percent annual interest. She will pay 20 percent of the purchase price as a down
payment. What is the total interest she will pay on her loan?
O $122,877.92
O $126,168.64
$135,200.87
O$142,613.78
The total interest she will pay on her loan is $ 126080.80
Step-by-step explanation:
Given : Julie is purchasing a home for $169,000.
She will pay 20 percent of the purchase price as a down payment.
So, 20% of $169,000 is given as ,
169000\cdot\frac{20}{100}=33800
Thus, amount left to pay = 169,000 - 33800 = $ 135200
Now, Her loan has been approved for a 30-year fixed-rate loan at 5 percent annual interest.
So, Finding monthly payment using formula,
P=\frac{PV\cdot r}{1-(1+r)^{-n}}
Where, PV = present amount
P = monthly payment
r is interest rate per period
n is time per period
Here, PV = 135200
time period = 30 × 12 = 360 months
Monthly interest rate = 5 % = \frac{5}{1200}
Substitute, we have,
P=\frac{135200\cdot\frac{5}{1200}}{1-\left(1+\frac{5}{1200}\right)^{-\left(30\cdot12\right)}}
Simplify, we have,
P = 725.78
Thus, Monthly payment is $ 725.78
Thus, the value of loan after 30 years becomes,
725.78\cdot30\cdot12=261280.8
Total interest paid = Total loan amount after 30 years - present amount
Total interest paid = 261280.8 - 135200 = 126080.8
Thus, The total interest she will pay on her loan is $ 126080.80
Given the following values of economic aggregates as a percentage of GNP in the U.S. Find the current account balance and the financial (capital) account balance assuming that statistical discrepancy is zero.
Unilateral Transfers = - 1.5%
Exports = 2.2%
Imports = 4.3%
Investment = 16%
Taxes = 12%
Government Exp. =. 17%
Private Saving. = 12%
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Journalize the entry for Hot Rod Service using the following data from the payroll register: Regular earnings $16,370 Overtime earnings 903 Federal income tax withheld 2,268 Social Security tax withheld 827 Medicare tax withheld 194 Pension contribution from employees 711 Health insurance premiums 807 If an amount box does not require an entry, leave it blank.
Answer: Check explanation
Explanation:
Based on the information given, the journal entry will be:
Debit Wages and Salaries $17273
Credit Employee Income Tax Payable $2268
Credit Social security tax payable $827
Credit Medicare tax payable $194
Credit Pension plan deduction payable $711
Credit Health Insurance premium payable $807
Credit Cash $12466
Note:
Wages and salaries expense is the addition of Regular Earnings and the Overtime Earnings which is:
= 16,370 + 903
= 17,273
During 2017, half of the treasury stock was resold for $264,000; net income was $720,000; cash dividends declared were $1,620,000; and stock dividends declared were $620,000.
The 2017 sale of half of the treasury stock would:__________
Reduce retained earnings by $96,000
Reduce retained earnings by $64,000
Increase total shareholders' equity by $360,000
Reduce income before tax by $96,000
Answer:
The answer is "Reduce retained earnings by [tex]\$64,000[/tex]"
Explanation:
cost [tex]= \frac{720000}{2} = 360000[/tex]
The difference between the cost and sale [tex]= 360000-264000 = 96000[/tex]
First, buyback shares -payment of capital are debited = 32000
The rest is retained earnings adjusted
Outline a research design using observation for each of the following situations:
a. A bank wishes to collect data on the number of customer services and the frequency of customer use of these services.
b. A state government wishes to determine the driving public's use of seat belts.
c. A researcher wishes to know how many women have been featured on Time covers over the years.
d. A human resource manager wants to know what salaries their key competitors are offering for some common positions.
e. A fast-food restaurant manger wishes to determine if they serve their customers as quickly as their competitors.
f. A magazine publisher wishes to determine exactly what people look at and what they pass over while reading one of its magazines.
g. An overnight package delivery service wishes to observe delivery workers beginning at the moment when they stop the truck, continuing through the delivery of the package, and ending when they return to the truck.
Explanation:
a) A bank wishes to collect data on the number of customer services and the frequency of customer use of these services.
Explanation:
a. A bank wishes to collect data on the number of customer services and the frequency of customer use of these services
Holt Industries received a $2,000 prepayment from the Ramirez Company for the sale of new office furniture. Holt will bill Ramirez an additional $3,000 upon delivery of the furniture to Ramirez. Upon receipt of the $2,000 prepayment, how much should Holt recognize for a contract asset, a contract liability, and accounts receivable?
Answer and Explanation:
The computation of the contract asset, a contract liability, and accounts receivable is shown below:
The contract asset is zero as it is not satisfied with the performance obligation
The current liability is $2,000 as it denotes the deferred revenue of $2,000 so this represent the contract liability
And, the account receivable is zero as it does not have the account receivable till the delivery of the furniture
in this way it should be recorded
Waterway Industries is preparing its direct labor budget for May. Projections for the month are that 30600 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $18, what is the total budgeted direct labor cost for May?
Answer:
$1,652,400
Explanation:
Given that;
Projections for the month = 30,600 units
Direct labor time = 3 hours per unit
Labor cost per hour = $18
Then, Total budgeted direct labor cost for May would be;
= Projections for the month × Direct labor time × labor cost per hour
= 30,600 × 3 × $18
= $1,652,400
If a loan is made at an interest rate higher than that allowed by state law, the lender is guilty of _______, which is defined as charging interest higher than the law permits.
Answer:
Usury.
Explanation:
A loan can be defined as an amount of money that is being borrowed from a lender and it is expected to be paid back at an agreed date with interest.
Generally, the financial institution such as a bank lending out the sum of money usually requires that borrower provides a collateral which would be taken over in the event that the borrower defaults (fails) in the repayment of the loan.
However, if a loan is given to a borrower at an interest rate higher than that allowed by an established state law, the lender is said to be guilty of usury, which typically involves the act of charging interest higher than the law permits.
The sales tax in Massachusetts is 5%. Joanne bought a wood stove with a sales tax of $15. What was the cost of the wood stove before tax
Answer:
$315
Explanation:
The before-tax cost of the wood stove would comprise of 100% sales price plus 5% sales tax as hinted.
If 5%=$15=sales tax
before-tax sales price=100% sales price+5% sales tax
before-tax sales price=105%
sales tax of 5%=$15
1%=$15/5
1%=$3
105%=$3*105
105%(before tax sales price)=$315
The annual financial statements of a publicly held company has been auditied, and its interim financial statements have been reviewed. Which of the following is true about the applicaiton of professional standards to thie reiview?
a. Statements on Standards for Accounting and Review Services apply.
b. Both PCAOB standards and SSARS apply.
c. None of the above.
d. PCAOB standards apply
Answer: D. PCAOB standards apply
Explanation:
Based on the information given in the question, the statement that is true about the applicaiton of professional standards to thie review is that PCAOB standards apply.
The United States Public Company Accounting Oversight Board (PCAOB) simply refers to a a private sector, non-profit corporation, which was created by Sarbanes-Oxley Act of 2002, in order to oversee auditors in public companies so that the interests of investors can be protected and there can be a fair and informative audit reports.
When a company is operating at capacity and they lose revenue from regular customers by accepting a special order, the loss of revenue is an example of: An unavoidable cost A revenue cost An opportunity cost A sunk cost
Answer:
An opportunity cost
Explanation:
The opportunity cost is the cost where the loss occurs from the benefit could have been enjoyed in the case when the best alternative choice was selected Since in the question it is mentioned that the company operating at a capacity and than lose revenue from the regular customers so it is an opportunity cost
A middleman is Multiple Choice a person or firm whose sole responsibility is bringing a buyer to the last link in the distribution chain. a person or firm whose sole responsibility is to find distributors for a manufacturer's products. any intermediary between a manufacturer and end-user markets. a person or firm that takes possession of a product and in some way alters it before passing it on to ultimate consumers. an intermediary that sells to ultimate consumers.
Answer:
would you still like me to help you with this question
Doug Stamper just received an insurance settlement offer related to an accident he had several years ago. The offer gives Stamper a choice of one of the following three offers (payments are at the end of the period):
Option A: $2,000 per month for 84 months
Option B: $1,100 per month for 15 years
Option C: $125,000 lump sum today
Stamper can earn 6 percent on his investments. He does not care if he personally receives the funds or if they are paid to his heirs should he die within the settlement period. Which one of the following statements is CORRECT given this information?
a. Option B is the best choice because you will receive the most payments.
b. Option A is the best choice because it has the largest present value.
c. Option A is the best choice as it provides the largest monthly payment.
d. Option C is the best choice because it has the largest present value.
e. Option B is the best choice because it pays the largest total amount.
Answer:
Doug Stamper
The CORRECT statement is:
b. Option A is the best choice because it has the largest present value.
Explanation:
a) Data and Calculations:
Option A: $2,000 per month for 84 months is worth PV = $136,906.08:
N (# of periods) 84
I/Y (Interest per year) 6
PMT (Periodic Payment) 2000
FV (Future Value) 0
Results
PV = $136,906.08
Sum of all periodic payments $168,000.00
Total Interest $31,093.92
Option B: $1,100 per month for 15 years is worth PV = $130,353.87:
N (# of periods) 180
I/Y (Interest per year) 6
PMT (Periodic Payment) 1100
FV (Future Value) 0
Results
PV = $130,353.87
Sum of all periodic payments $198,000.00
Total Interest $67,646.13
Option C: $125,000 lump sum today is equal to PV.
John and Lisa form a partnership to operate a restaurant. Lisa signs a two-year lease on a space for the restaurant without consulting John. Under the legal concept of ________, John and the partnership are responsible for this lease, although it was only signed by Lisa. ANSWER Unselected unlimited liability Unselected mutual agency Unselected limited life Unselected capital accounting Unselected I DON'T KNOW YET submit
Answer:
John and Lisa form a partnership to operate a restaurant. Lisa signs a two-year lease on a space for the restaurant without consulting John. Under the legal concept of ________, John and the partnership are responsible for this lease, although it was only signed by Lisa.
unlimited liability
Explanation:
The concept of unlimited liability means that business owners are held personally liable for any debt their business might incur. This concept suggests that all involved business partners and the partnership itself are accountable for the full settlement of the debt, including the use of their personal assets when the assets of the partnership are not sufficient.
Adjust the percentages of Chris investments to make his portfolio one with potential high growth
Answer:
Savings account:10%
Stock:58%
Mutual fund :10%
22% bond
Explanation: I hope this helps :), I also got it right! ;)
Investment is a situation where a company or an individual acquires stocks, bonds, etc., or any other asset which provides them returns in the future.
While making a high-growth investment portfolio, Chris should focus on those investments which provide him with larger returns. But in order to get the returns, he should be ready to bear the risk also. The provided investments in relation to stock and mutual funds are risky investments but provide higher returns whereas the bonds and saving accounts are less risky and provide lesser returns.Therefore, Chris has to invest in stocks and mutual funds where he gets maximum returns with a higher risk in a high-growth investment portfolio.
Learn more about the investment in the related link:
https://brainly.com/question/14725780
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Use solver to answer the following question: A corrupt shipping concern wishes to maximize the revenue they make from an analytics-bereft manufacturing concern, which has 4 factories and 3 warehouses. Factory 1 supplies 1000 units per week and is charged $5, $3, and $4 to ship each unit to Warehouses 1, 2, and 3 respectively. Factory 2 supplies 1200 units each week and is charged $4, $3, and $3 to ship to Warehouses 1, 2, and 3. Factory 3 supplies 1500 units and is charged $6, $2, and $5 to ship to the three warehouses. Factory 4 supplies 1800 units and is charged $6, $2, and $4. If Warehouse 1 requires 3000 units per week, Warehouse 2 demands 1000, and Warehouse 3 demands 1500, what is the maximum it would cost them in shipping to fulfill each warehouse's demand?
Kelso Electric is debating between a leveraged and an unleveraged capital structure. The all equity capital structure would consist of 40,000 shares of stock. The levered capital structure would consist of 25,000 shares of stock plus $280,000 of debt with an interest rate of 7 percent. What is the break-even level of earnings before interest and taxes between these two options
Answer:
$52,267
Explanation:
Calculation to determine the break-even level of earnings before interest and taxes between these two options
EBIT/40,000 = [EBIT- ($280,000 ×0.07)]/25,000
EBIT/40,000 = [EBIT - ($19,600)]/25,000
Cross multiply
25,000EBIT=40,000(EBIT-19,600)
25,000EBIT=40,000EBIT-784,000,000
EBIT = $52,267
Therefore the break-even level of earnings before interest and taxes between these two options is $52,267
Successfulness of the competition policy in South Africa
Answer:
Five examples that support successfulness of the competition policy of South Africa are: 1) The product choices along with its competitive prices were provided to the consumers. 2) Practices such as horizontal collusion and resale price maintenance was declared unlawful in 1984.
Explanation:
If the cost of the beginning work in process inventory is $70,400, costs of goods manufactured is $955,000, direct materials cost is $343,000, direct labor cost is $223,000, and overhead cost is $328,000, calculate the ending work in process inventory.
Answer:
Ending WIP= $9,400
Explanation:
Giving the following information:
beginning work in process inventory is $70,400
Costs of goods manufactured are $955,000
Direct materials cost is $343,000
Direct labor cost is $223,000
Overhead cost is $328,000
To calculate the ending work in process, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
955,000= 70,400 + 343,000 + 223,000 + 328,000 - Ending WIP
Ending WIP= $9,400
The treasurer for Rahm Corp. was preparing a bank reconciliation as of September 30, 2017. The following items were identified: Rahm's book balance $32,800 Deposits in transit 4,300 Outstanding checks 2,200 Interest earned on checking account 100 Customer's NSF check returned by the bank 400 Rahm Corp.'s adjusted cash balance at September 30, 2017 is
Answer:
$32,500
Explanation:
The items that appear on the Bank Statement and not on the Cash Book are used to update the Cash Book Balance.
Rahm Corp
Cash Book
Debit :
Balance before adjustment $32,800
Interest earned $100
Total $32,900
Credit :
Dishonored check $400
Balance (adjusted) $32,500
Total $32,900
Therefore,
Rahm Corp.'s adjusted cash balance at September 30, 2017 is $32,500
under FINRA rules, numbered accounts are: A prohibited B permitted with the prior approval of FINRA C permitted if the firm maintains a written statement of the customer attesting to ownership D permitted without any additional supporting documentation
Answer:
C permitted if the firm maintains a written statement of the customer attesting to ownership
Explanation:
FINRA can be regarded as body which carry out regulation of trading in corporate bonds, as well in equities, and securities futures. All firms that deals with securities are
usually member of FINRA.One of FINRA requirements is that
maintaining an accounts should be in
customer name a numbered account can be maintained in case the firm leave a written statement by the customer in a file which attest to ownership.It should be noted that under FINRA rules, numbered accounts are permitted if the firm maintains a written statement of the customer attesting to ownership.
An actuary is a person who assesses various forms of risk. Based on past data, the holder of an automobile insurance policy pays an insurance premium of $1200 and has a 5% chance of an accident causing $1000 of damage, a 2% chance of $5000 damage and a 1% chance of totaling the car worth $25,000. The probability of the insurance holder making through the year without any accidents is 92%. Find the expected value and interpret it. Is the insurance company likely to make or lose money with this type of policy in the long run
Answer:
With this policy throughout the long run, the insurance company will make money. A further explanation is provided below.
Explanation:
According to the given values in the question,
The expected value will be:
⇒ [tex]E(value) = Sum \ of \ (x\times P(x))[/tex]
By putting all the given values, we get
⇒ [tex]=1000\times 0.05+5000\times 0.02+25000\times 0.01+0\times 0.92[/tex]
⇒ [tex]=50+100+250+0[/tex]
⇒ [tex]=400[/tex] ($)
As we can see that,
[tex]E(value)<premium[/tex]
[tex]400<1000[/tex]
Thus the above is the correct answer.