Saving Plan Options An insurance company offers asaving plan that has two options for the insured to withdrawmoney after maturity. Option A consists of a guaranteed paymentof £1500 at the end of each month for 15 years. Alternatively,under option B, the insured receives a lump-sum payment equal tothe present value of the payments described under option A.(a) Find the sum of the payments under option A.(b) Find the lump-sum payment under option B if it is determinedby using an interest rate of 2.25% compounded monthly. Roundthe answer to the nearest pound.C. Which option is better? Why?

Option A vs. Option B: Choosing the better optionOption A: Provides a fixed income of £1500 every…

Answered: Saving Plan Options An insurance…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Phillip Witt, president of Witt Input Devices, wishes to create a portfolio of local suppliers for his new line of keyboards. He has a total of 3 suppliers available. Philip believes that the probability of a super-event that might shut down all suppliers at the same time to be 3.0%. Such a shutdown would cost company 5 million dollars. He estimates the unique event risk for any supplier to be 5.0 %. Assuming that managing an additional supplier is 1 thousand dollars, how many suppliers should Philip use? Assume that suppliers are identical. (Only enter a number without any units.
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