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Chapter 30, Problem 3P

a)

Summary Introduction

To determine: Insurance premium.

Introduction:

To manage risk, a firm pays a yearly payment called insurance premium, instead of purchasing the insurance to pay off the losses.

b)

Summary Introduction

To determine: The net present value.

Introduction:

Net present value refers to the difference between the cash inflow and cash outflow.

Summary Introduction

To discuss: The sources of gain.

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