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c. What is risk management? For Family Pharmacy, identify and explain one pre-loss and one post-loss objectives of risk management. (5 marks) d. Family Pharmacy

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c. What is risk management? For Family Pharmacy, identify and explain one pre-loss and one post-loss objectives of risk management. (5 marks) d. Family Pharmacy is considering setting up a risk management system, which will cost about $9,000,000 for physical asset protection. After completing the feasibility study, the risk manager of Family Pharmacy projects that this system might generate the following estimated net after-tax cash flows: Year 0 1 2 3 4 Cash Flow -$8,000,000 $2,500,000 $2,800,000 $2,800,000 $2,600,000 If Family Pharmacy requires a 10 percent return on its investments, should it accept this risk control project based on the net present value (NPV) criterion? Explain your answers and show all your calculations. (4 marks) 2

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