Question
TV Queen BALANCE SHEET as of June 30, 2000 ASSETS Total Current Assets $6,000,000.00 Long Term Assets: Total Long-term Assets $11,500,000.00 TOTAL ASSETS $17,500,000.00 LIABILITIES:
TV Queen
BALANCE SHEET
as of June 30, 2000
ASSETS
Total Current Assets
$6,000,000.00
Long Term Assets:
Total Long-term Assets
$11,500,000.00
TOTAL ASSETS
$17,500,000.00
LIABILITIES:
Total Current Liabilities
$4,000,000.00
Long Term Liabilities
Total Long-term Liabilities
$9,500,000.00
TOTAL LIABILITIES
$13,500,000.00
TOTAL STOCKHOLDER'S EQUITY
$4,000,000.00
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
$17,500,000.00
The CFO of TV Queen is looking for the best way to finance workers' compensation risk. TV Queen is looking at a third party vendor to address this loss exposure.All financial information on the balance sheet will stay steady for the next decade and TV Queen's internal rate of return is 10%.
TV Queen has obtained a quote from a highly rated third-party insurer who is willing to guarantee that TV Queen's insurance premiums will be $150,000 per year for the next 10 years for its workers' compensation claims.
Question. What is the present value of the future cash flow?Remember, this decision has a 10-year time horizon.
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Botany An Introduction To Plant Biology
Authors: James D. Mauseth
6th Edition
1284077535, 978-1284077537
