Question

Suppose that, in response to a claim that resulted in physical injury, an insurance company is...

Suppose that, in response to a claim that resulted in physical injury, an insurance company is responsible for making 25 annual medical payments. The first payment, to be made now, will be 50,000. After that, the payments will increase annually for inflation, at a rate of 6% per year. The real interest rate is 4% per year. Calculate the present value these 25 payments.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Appreciate your feedback

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose a company charges an annual premium of $130 for an insurance policy for minor injuries....
Suppose a company charges an annual premium of $130 for an insurance policy for minor injuries. Actuarial studies show that in case of an injury claim, the company will pay out an average of $900 for outpatient care and an average of $3000 for an overnight stay in the hospital. They also determine that, on average, each year there are five claims made that result in outpatient care for every 1000 policies and three claims made that result in an...
suppose a company charges an annual premium of $110 for insurance policy for minor injuries. Actuarial...
suppose a company charges an annual premium of $110 for insurance policy for minor injuries. Actuarial studies show that in case of an injury claim, The company will pay out an average of $900 for each outpatient care in an average of $3000 for an overnight stay in the hospital. they also determine that on average each year there are five claims made as a result in outpatient care for every 1000 policies in three claims made that result in...
Suppose the economy is initially in equilibrium, and real and potential GDP are equal. Now, suppose...
Suppose the economy is initially in equilibrium, and real and potential GDP are equal. Now, suppose export orders increase. Under these circumstances, which of the following statements is true? If the countercyclical fiscal policy response is made correctly, the new equilibrium will in the long run have a higher rate of inflation than if no response had been made. If the countercyclical fiscal policy response is made correctly, the new equilibrium will in the long run have a lower rate...
a. The NewLife Insurance Company is offering an insurance policy that will give you and your...
a. The NewLife Insurance Company is offering an insurance policy that will give you and your offspring $18,000 per year forever. If you require 6% return on investment the how much would you have to pay for the policy? b. If in part a. above the cost of the policy was 360,000 what would you expect the interest rate to be for this to be a fail deal? c. You’re considering to get a loan. Bank A charges 15% annually...
For a company, the project costs $50,000 now and $6000 per year for 7 years beginning...
For a company, the project costs $50,000 now and $6000 per year for 7 years beginning 1 year from now with increases of 8% per year thereafter for the next 9 years. Calculate present worth ($) with a real interest rate of 10% per year and an inflation rate of 4% per year
Instruction: Clearly present the cash flow diagram(s), equivalency model(s), assumptions made and detailed calculations for each...
Instruction: Clearly present the cash flow diagram(s), equivalency model(s), assumptions made and detailed calculations for each problem as applicable. Question. A series of six real dollar payments are made. The first payment made at the end of the first year is for $12,000 and each subsequent payment increases at the rate of 5% per year. If the inflation rate has averaged 3% and the market interest rate is 12%, determine the present of the series.
PP2: You've bought an inflation-adjusted annuity to give you a constant real income during your retirement...
PP2: You've bought an inflation-adjusted annuity to give you a constant real income during your retirement years. The annuity will make 20 annual payments. The first payment of $80,000 will occur one year from now Annual payments will then grow at the rate of inflation, 3%, for 19 more years and then stop. (There are 20 total payments and the last payment is made at the end of year 20.) The interest rate is 8%. What is the present value...
Problem 5 [Following questions are independent of each other] a) If the inflation is 8% per...
Problem 5 [Following questions are independent of each other] a) If the inflation is 8% per year and the market interest rate paid by the bank is 12% per year, how much would be your real earning rate if you invest money into the bank? b) Suppose that you rented your business property to receive the rent annually. At the end of each year you will receive 60,000 TL then-current money for 5 years. If the annual inflation rate is...
Suppose that you are the manager of a newly formed retirement fund. You are to set...
Suppose that you are the manager of a newly formed retirement fund. You are to set up a series of semiannual payments to accumulate a sum of $1,000,000 in ten years. You assume that the appropriate interest rate for the period is 6 percent annual, compounded semiannually. The first payment into the fund will be made six months from today and the last payment will be at the end of the tenth year. Note: this problem is meant to make...
Suppose that you will receive annual payments of $12,500 for a period of 10 years. The...
Suppose that you will receive annual payments of $12,500 for a period of 10 years. The first payment will be made 9 years from now. If the interest rate is 6%, what is the present value of this stream of payments? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT