Question 1: If a firm wants to have $1 million in cash available in three years, how much must it invest now at an 8 percent interest rate?
Question 2: An insured has the following four liability insurance policies: $300,000 with insurer A, $300,000 with insurer B, $700,000 with insurer C, and $900,000 with insurer D. Each policy apportions losses using the equal shares method.
o How much will each policy pay for a $200,000 loss?
o How much will each policy pay for a $2 million loss?