help Andrea has had automobile insurance with ABC Insurance Company for several years and has recently startedworking from home. The insurance company has recently implemented the option to increase their OPCF 20 limitfrom $1000 to $3000. Andrea's automobile renewal has just been sent to her. What is the broker's obligation inregards to this change and why? 4OA) No action is required by the broker. As Andrea is working from home it is unlikely that she will need a higherlimit.OB) Contact Andrea and advise her of the higher coverage option so that Andrea can decide to request ordecline the increase in coverage.OC) No action is required by the broker. It is the responsibility of the client to advise of any material change inrisk.OD) Request the Principal Broker to advise the carrier to increase the OPCF 20 limit on all their policies whenthey are due for renewal. Zoning by-laws in the area where your insured resides are changed to permit commercial occupancy. Your insureddecides to open a small restaurant in the basement of his/her home. What is the effect of this change on coverageunder your insured's Homeowners policy?OA) The policy will not apply unless it contains a By-laws Endorsement.OB) The policy will not apply until he/she installs automatic fire protection equipment in the kitchen.OC) It is a change material to the risk and failure to notify the insurer could impair the coverage.OD) The replacement cost clause will no longer apply to the risk.

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Answered: Andrea has had automobile insurance…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter7: Nonlinear Optimization Models

Section7.3: Pricing Models

Problem 5P

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Pricing Decisions at Madison The Madison Company manufactures and retails a certain product. The company wants to determine the price that maximizes its profit from this product. The unit cost of producing and marketing the product is 50. Madison will certainly charge at least 50 for the product to ensure that it makes some profit. However, there is a very competitive market for this product, so that Madisons demand falls sharply when it increases its price. How should the company proceed?2 In the pricing model in Example 7.1 with the constant elasticity demand function, the assumption is that all units demanded are sold. Suppose the company has the capacity to produce only 200 units. If demand is less than capacity, all of demand is sold. If demand is greater than or equal to capacity, only 200 units are sold. Use Solver to find the optimal price and the corresponding profit. Then use SolverTable to see how sensitive these answers are to the production capacity, letting it vary from 170 to 230 in increments of 10. Discuss your findings relative to the original solution in Example 7.1. In other words, what is the effect of capacity on the optimal price and profit?
Purchase Discounts It is typically beneficial for companies to take advantage of early-paymentdiscounts allowed on purchases made on credit. To see why this is the case, determine the effectiverate of interest associated with not taking advantage of the early-payment discount for each of thefollowing situations. Assume in each case that payment is made on the 30th day of the billing cycle.Required1. What is the opportunity cost of not taking advantage of the discount associated with purchases madeunder the following terms: 2/10, n/30? (Show calculations.)2. What is the opportunity cost of not taking advantage of the discount associated with purchases madeunder the following terms: 1/10, n/30? (Show calculations.)3. To motivate managers to take early-payment discounts, what is the appropriate accounting treatment forpurchase discounts?
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Mr Price, has no debt outstanding and a total market value of R150,000. Earnings before interest and taxes [EBIT] are projected to be R14,000 if economic conditions are normal. If there is a strong expansion in the economy, then EBIT will be 30% higher. If there is a recession, then EBIT will be 60% lower. Mr Price is considering a R60,000 debt issue with a 5% interest rate. The proceeds will be used to repurchase shares of stock. There are currently 2,500 shares outstanding. Ignore taxes for this problem. Assuming that Mr Price goes through with recapitalization. Calculate the % changes in EPS when the economy enters a recession

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