A 28- year- old man pays $158 for one year life insurance policy with coverage of $110,000, If the probability he will live through the year is 0.9994, what is the expected value for the insurance policy?
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- You live in an area that has a possibility of incurring a massive earthquake, so you are considering buyingearthquake insurance on your home at an annual cost of $180. The probability of an earthquake damagingyour home during one year is 0.001. If this happens, you estimate that the cost of the damage (fully coveredby earthquake insurance) will be $160,000. Your total assets (including your home) are worth $250,000.15. A city mayor decides to construct a new bridge over the major river in the town. The estimated life of such a structure will be 20 years. There is a 70% probability that the total initial costs (consulting fees and construction) will be $800,000 and a 30% probability that such costs would be $1 million. There is 100% probability that the maintenance costs would be $30,000 every 5 years. How much money should the city borrow now in order to carry out the entire project including maintenance? The interest rate is 5%.A baseball team has signed a draft pick to a two year contract. The player's expectedmarginal revenue product in year 1 and year 2 are $1-million and $1.7-millionrespectively. The contracted wage is $1.3-million in the first year. The interest rate is7% each year. The competitive wage in year 2 is expected to be $1.8-million. If theteam is indifferent about the player resigning with it at the end of his contract, howmuch will they pay him in the second year? Use a$ and commas.
- An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $350 at the end of Year 5, and $600 at the end of Year 6. If other investments of equal risk earn 7% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent.Benjamin receives an annual bonus of $1,000 and wants to invest it in an account that earns interest for the next 3 years. Below are the two options that he is considering putting his money into. Which of the following statements is true? NEED ASAP PLS. Benjamin receives an annual bonus of $1,000 and wants to invest it in an account that earns interest for the next 3 years. Below are the two options that he is considering putting his money into. Which of the following statements is true? Bank A 5% Simple Interest Bank B 5% Interest Compounded Annually Simple Interest: /= Prt; Compound interest A=P(1+r)² O After 3 years, Bank B will pay Benjamin $1875 more than Bank B. O After 3 years, Bank B will pay Benjamin $3000 more than Bank A. O After 3 years, Bank B will pay Benjamin $1007.63 more than Bank A. O After 3 years, Bank B will pay Benjamin $7.63 more than Bank A. O After 3 years, Bank A will pay Benjamin $10.13 less than Bank B.4) You are a financial professional working in a corporate loan department. A company named Mitch Hedberg Inc. (MH) comes to you for a loan. MH has debt from a previous loan (given by a different firm than yours) of 200. Your company analysts say that MH is likely to earn either 180, 240, or 300 this year - each with a probability of 1/3. MH wants you to lend them 100. MH could use this borrowed 100 to do either project X or project Y. Project X has a guaranteed return of 125 if the 100 is put there. Project Y may return either 0 or 210; each has probability of 1/2 and also costs 100 to do. a) Which project, X or Y, has the larger expected value? b) If you lend MH the 100, what will they do with the money? Why? Show your math. c) Should you lend MH the money or not? Show your math. d) Why did I choose the letters "MH" for this problem? What financial economic concept with initials "MH" is important in this problem?
- An investment will pay $100 at the end of each of the next 3 years, $300 at the end of year 4, $500 at the end of Year 5, and $300 at the end of Year 6. If other investments of equal risk earn 8% annually, what is this investment's present value? 923.98 976.31 1013.78 1007.56Many retirement funds charge an administrative fee equal to 0.25% on managed assets. Suppose that Alex and Spenser each invest $50,000 in the same year. Alex invests in a no-load fund (that doesn’t charge the 0.25% fee) and earns 5% a year. Spenser uses another retirement fund that charges the 0.25% fee and so only earns 4.75%. After 30 years, how much more will Alex have than Spenser?True/ False The value of an investment can be determined by the rate or return.
- Guy Fieri has purchased a significant plot of land in Northwest Ohio for his newest venture: FlavorTownship. This hub for mind-boggling flavor and entertainment is a strictly for-profit operation. Guy would like to keep Flavor Township open all year-round, but due to Ohio weather the following are the probabilities of when it will be open: |- 30% chance it is open 300 days a year |- 55% chance it is open 325 days a year |- 15% chance it is open 350 days a year Flavor Township will expect to host 14,000 people each day that it is open and expects an average revenue of $45 per visitor. This paradigm-shifting landmark will cost $420,000,000 to start the investment and will require annual costs (food, employees, etc.) of $115,000,000. Every 3 years, Flavor Township will undergo necessary maintenance that will cost $22,000,000. If the expected life of Flavor Township is 15 years and a 16% return is expected, what is the expected NPV of this project?How do I find the expected Net Present Worth?Assume that a customer shops at a local grocery store spending an average of $200 a week, resulting a retailer profit of $10 each week from this customer. Assuming the shopper visits the store all 52 weeks of the year, calculate the customer lifetime value if this shopper remains loyal over a 10-year lifespan. Also assume a 5 percent annual interest rate and no initial cost to acquire the customer. Describe ways marketers can increase the lifetime value of a customer.