Suppose that a business expects to have profits of $100000 if it is not sued over...

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Suppose that a business expects to have profits of $100000 if it is not sued over the coming year. The probability of a suit is 0.04 and the loss if a suit occurs is $250000. The firm's tax rate if it earns positive profits is 30%. If it makes negative profits, it pays a 0 % rate. (a) (b) What is the firm's before tax expected profit without insurance? What is it's after-tax expected profit without insurance? What is the firm's expected before- and after-tax profit if it purchases a liability insurance policy with full coverage for a premium of $11000 (assume that the premium is a tax-deductible expense)? Suppose that a business expects to have profits of $100000 if it is not sued over the coming year. The probability of a suit is 0.04 and the loss if a suit occurs is $250000. The firm's tax rate if it earns positive profits is 30%. If it makes negative profits, it pays a 0% rate. (a) (b) What is the firm's before tax expected profit without insurance? What is it's after-tax expected profit without insurance? What is the firm's expected before- and after-tax profit if it purchases a liability insurance policy with full coverage for a premium of $11000 (assume that the premium is a tax-deductible expense)? Suppose that a business expects to have profits of $100000 if it is not sued over the coming year. The probability of a suit is 0.04 and the loss if a suit occurs is $250000. The firm's tax rate if it earns positive profits is 30%. If it makes negative profits, it pays a 0 % rate. (a) (b) What is the firm's before tax expected profit without insurance? What is it's after-tax expected profit without insurance? What is the firm's expected before- and after-tax profit if it purchases a liability insurance policy with full coverage for a premium of $11000 (assume that the premium is a tax-deductible expense)? Suppose that a business expects to have profits of $100000 if it is not sued over the coming year. The probability of a suit is 0.04 and the loss if a suit occurs is $250000. The firm's tax rate if it earns positive profits is 30%. If it makes negative profits, it pays a 0% rate. (a) (b) What is the firm's before tax expected profit without insurance? What is it's after-tax expected profit without insurance? What is the firm's expected before- and after-tax profit if it purchases a liability insurance policy with full coverage for a premium of $11000 (assume that the premium is a tax-deductible expense)?

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To calculate the firms beforetax expected profit without insurance we need to consider two scenarios ... View the full answer