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Policy A Policy B Fire/Theft A company is considering two insurance plans with coverage and premiums shown in the table. (For example, this means that $50 buys one unit of plan A, consisting of $10,000 fire and theft insurance and $180,000 of liability insurance.) Answer parts (a) and (b). $10,000 $15,000 Liability $180,000 $120,000 Premium $50 $40 www (a) The company needs at least $300.000 fire and theft insurance and at least $3.600.000 liability from these plans.

Policy A Policy B Fire/Theft A company is considering two insurance plans with coverage and premiums shown in the table. (For example, this means that $50 buys one unit of plan A, consisting of $10,000 fire and theft insurance and $180,000 of liability insurance.) Answer parts (a) and (b). $10,000 $15,000 Liability $180,000 $120,000 Premium $50 $40 www (a) The company needs at least $300.000 fire and theft insurance and at least $3.600.000 liability from these plans.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Policy A Policy B Fire/Theft $10,000 $15,000 A company is considering two insurance plans with coverage and premiums shown in the table. (For example, this means that $50 buys one unit of plan A, consisting of $10,000 fire and theft insurance and $180,000 of liability insurance.) Answer parts (a) and (b). Liability $180,000 $120,000 Premium $50 $40 *** (a) The company needs at least $300,000 fire and theft insurance and at least $3,600,000 liability from these plans, How many units should be purchased from each plan to minimize the cost of the premiums? What is the minimum premium? The company should purchase 12 units of Policy A and 12 units of Policy B, for a premium of $ 1080 (b) Suppose the premium for policy A is reduced to $25. Now how many units should be purchased from each plan to minimize the cost of the premiums? What is the minimum premium? The company should purchase units of Policy A and units of Policy B, for a premium of $
Transcribed Image Text:Policy A Policy B Fire/Theft $10,000 $15,000 A company is considering two insurance plans with coverage and premiums shown in the table. (For example, this means that $50 buys one unit of plan A, consisting of $10,000 fire and theft insurance and $180,000 of liability insurance.) Answer parts (a) and (b). Liability $180,000 $120,000 Premium $50 $40 *** (a) The company needs at least $300,000 fire and theft insurance and at least $3,600,000 liability from these plans, How many units should be purchased from each plan to minimize the cost of the premiums? What is the minimum premium? The company should purchase 12 units of Policy A and 12 units of Policy B, for a premium of $ 1080 (b) Suppose the premium for policy A is reduced to $25. Now how many units should be purchased from each plan to minimize the cost of the premiums? What is the minimum premium? The company should purchase units of Policy A and units of Policy B, for a premium of $
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