Based on historical data, assume you have estimated the average dollar amount of loss per claim for the nextcouple of years (see the table below). How much money should you budget today (year 2022) for claims in2022 and 2023 associated with products sold in 2021 (first two cells in the last column of the following table)?Assume the interest rate is 6% for the next five years. The following table is supposed to help you achieve thefinal answers.Yearint rate $ per claim tPV ($ perclaim)Number ofClaimsPV of claims2022 6.00% $11,900 02023 6.00% $12,50012024 6.00% $12,9002OA) 95,268 and 65,578.71OB) 103,512 and 75,269.53OC) 107,576 and 68,278.29D) 114,255 and 71,632.54Show Transcribed TextงThis question is related to the above question. How much money should you budget today (year 2022) forclaims in 2024 and over all the years together (2022-2024) associated with products sold in 2021 (last twocells in the last column of the table in the last question)? Assume the interest rate is 6% for the next fiveyears.OA) 235,933.52 and 411,787.81OB) 256,524.79 and 435,875.62OC) 268,784 23 and 458,971.34OD) 289,548 65 and 487,549 37

The answer is C) 107,576 and 68,278.29.Here's how to calculate the present value (PV) of claims for…

Answered: Based on historical data, assume you…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. You have developed an innovative new project that is estimated to produce an annual revenue stream (money in) of $15,000 per year for the next 10 years. Your current corporate cost of Money is 4%. However, in year 5, your CFO projects that rate will rise to 6% for the remaining five years of the project's lifespan. What is the NPV of this money in cashflow today? (we are ignoring any money out costs)
"If you purchase a car from a certain dealership, you expect to have four free oil changes per year during the five years you keep the car. Each oil change would normally cost you $26.61. If you save your money in a mutual fund earning 4.55% per quarter, how much are the oil changes worth to you at the time you buy the car?" A) 538.76 B) 493.01 940.54 D 264.48 E) 472.68
9. 3 decimal places in final answer
5 Question Let Ya,n be the present value of an n-year term continuous annuity of $1 per year for an insured aged x. Let Y be the present value of a whole life continuous annuity of $1 per year for an insured aged x. Given a constant force of interest, 8, show that: 1 бп Cov (Yz,n, Yz) = (A — e¯ðª‚„Ez (1 − Āz+n) — Ã‚±‚ñ¦Ã‚) 82 n. - -
(a) A firm increases by 7.2% in the first 6 months and decreases by 9.6% in the second half of year 2. Determine the percentage during the year. (b) The number of trees in the forest at the beginning of this year was 20,000,000 trees, every year 10% of these trees are cut down and 1,750,000 new trees are planted. Calculate how many trees there are in debt at the end of year 2 and explain what will happen to the tree in the long run.
What will be Relationship between Excess Supply/Demand Conditions, Interest Rates, Investor Returns, and “Going-In” Cap Rates
INSTRUCTION: SHOW YOUR COMPLETE SOLUTION AND HIGHLIGHT YOUR FINAL ANSWER. 1. Nikki deposited an amount of P150,000 for 31 days that earns P845.53 on maturity date after deducting the 20% withholding tax on interest income. Find the rate of interest per annum.
The value of land in Manhattan was around $150 billion in 2008. Imagine that it is 1626 and you are the economic advisor to the Dutch when they are considering whether to buy Manhattan from the Manhasset Indians. Further,assume that the relevant interest rate for calculating the present value is 4%per year. Would you advice the Dutch that a purchase price of $24 is a good deal or not? How would your answer change if the interest rate were 6%? And 8%? (Hint: for each interest rate,calculate the present value in 1626 of the land value as of 2008. Then compare that with the purchase price in 1626. For example, simplify by assuming that the owners collect no rents on the land. As an advanced further question,assume that the rent equals 2% of the value of the land each year.)
If the total interest paid equals the borrowed principal over 20 years, determine the discount rate applied. Determine the equivalent simple interest rate.
Question 4 Part B: You have decided to invest in a project to build and run a production line for a friend. Your friend has specified that the production line needs to last forever, and will always be operational. The associated costs for the project are shown in the table below. How much should you charge your friend now for the production line in order to build and maintain the perpetual project? Interest rate is 6%. Costs Initial Cost Annual Operating & Maintenance Costs Major Maintenance Costs Amount $175,000 $10,000 $80,000 Year incurred Year O Per year, forever First in year 5, then every 5 years forever Question 4 Part B: What is the equation used to find portion of the cost due to the Recurring Cost (major maintenance costs)? P [80,000(A/F, 6%, 5)]/0.06 P = [80,000(F/A, 6%, 5)]/0.06 OP=80,000(F/A, 6%, 4)
A corporate bond pays 6% of its face value once per year. If this $10,000 10-year bond sells now for $10,450, what yield will be earned on this bond? Assume the bond will be redeemed at the end of 10 years for $10,000. The yield to maturity is %. (Round to two decimal places.)
Mr. Jones is scheduled to retire on his 65th birthday. He was born January 1, 1946 and was hired by his present employer on January 1, 2001, with a starting salary of $50,000 per year. His employer makes contributions to a pension fund on the first day of January, April, July and October until he retires. Each contribution is 1% of his annual salary. The pension fund earns a nominal annual rate of interest of 8% compounded quarterly. Smith's salary is scheduled to increase by 8% every January 1 starting in 2002. The final employer contribution is on October 1, 2010. Find the value of Smith's pension fund on his 65th birthday.

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