Question1. ABC Corporation is covered by the two CGL policies. Policy A has limits of $500,000. Policy B has limits of $1,000,000. Both of such policies offer primary coverage for a $750,000 Loss. What dollar amount will each and every policy pay toward this loss when each of the following methods of sharing is employed?
A. Contribution by equal shares
B. Contribution by limits.
Question2. Explain the purpose of certificates of insurance and describe the special problems which can arise in regards to
A. The requirements for notice of the cancellation
B. The inclusion of additional inured.
Question3. Midwest Packaging's ROE previous year was only 6%; but its management has developed the new operating plan that calls for the debt-to-assets ratio of 55%, which will result in annual interest charges of $352,000. The firm has no plans to employ preferred stock. Management projects an EBIT of $856,000 on sales of $8,000,000, and it anticipates having a total assets turnover ratio of 3.6. Under these situations, the tax rate will be 30%. When the changes are made, what will be the company's return on equity?