A firm owns a building worth 1,500,000. The premium for insurance on the building will cost $50,000.00.
Fantastic news! We've Found the answer you've been seeking!
Question:
A firm owns a building worth 1,500,000. The premium for insurance on the building will cost $50,000.00. Expected annual losses on the building is $30,000. The firm would earn 14% on funds applied to operations. Invested reserves earn 4%. What is the true cost of retaining the risk of loss on its building, including opportunity costs. Explain your answer and show your work.
Posted Date: