Question 1 Suppose that a business expects to have profits of $200,000 if it is not sued over the coming year. The probability of a suit is 0.05, and the loss if a suit occurs is $300,000. The firm's tax rate if it earns positive profits is 30 percent. If it makes negative profits, it pays zero percent rate. i. What is the firm's before tax expected profits without insurance? ii.Whatisitsaftertaxexpectedprofitwithoutinsurance?iii.Supposethefirmcanpurchasealiabilityinsurancepolicywithfullcoverage(4marks) for a premium of $11,000. From the insurer's point of view, does this policy have a positive loading. ( 2 marks) iv. What is the firm's expected before and after tax profit if it purchases the insurance policy (assume that the premium is a tax deductible expense)? (6 marks) v. Compare the expected after-tax profits with and without insurance. Explain. (4 marks)