A Company Has a Current Tax Rate of 30% and Faces

question 6

Multiple Choice

A company has a current tax rate of 30% and faces a 15% chance that the its output prices will drop and it will lose $100,000 over the next year.The firm would then be in a 10% tax bracket if it faces a loss.Compute the net present value (NPV) from purchasing insurance if the rate of interest is 5% and the beta of the output prices is 0.

• A)$1932
• B)$2178
• C)$2857
• D)$2591
• E)$3122

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Knowledge Base

The structured collection of information, facts, and principles that an individual or system possesses, often related to a specific topic or field.

Qualitative Designs

Research methodologies that focus on gathering non-numerical data to understand concepts, perceptions, or experiences.

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Research methods focusing on the collection and analysis of numerical data to understand patterns, relationships, and causality.

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Detailed, nuanced accounts of phenomena, typically in qualitative research, that aim to capture the complexity and context of the subject matter.