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Grind 7,8
Grind 7,8
Perez
BSA -2C
GRIND #7
1. D.
2. A.
3. C.
Solution:
The amount sought by the claimant 160,000
(800,000 x 20%)
The amount awarded by the same
Judge- (400,000 x 80%) 320,000
480,000
Multiply: Discount factor
(1/1.10) .909090
436,363.20
Multiply: Risk adjustment factor 1.07
466,908.60
Multiply: (100% - 30%) 70%
Present Value of Cash Flow 326,835.60 or 326,836
BSA -2C
GRIND #8
2. 4,000,000
3. E.
4. C.
Solution:
Sales in Units 500,000
Multiply: Estimated coupons to be redeemed 80%
Number of coupons 400,000
Multiply: required no. of coupons for redemption 1
400,000
Multiply: Net cost of premium
(55 – 40) 15
600,000
5. C.
Premium expense 6,000,000
Less: Premiums to be distributed 4,500,000
(300,000/1 x 15)
Estimated Premium Liability, end 1,500,000