Actuarial Notes

Exam DISC-RM Practice Question 2

Study guide: Exam DISC-RM

With illustrative figures in thousands of dollars, a firm has annual revenue of $5,000, salaries of $3,000, other operating costs of $1,200 and interest of $300. Its owners value it at 10 times its annual profit. The firm adopts a safety and insurance program that costs $100 a year. As a result, customers buy more, raising revenue by $60; employees accept $40 less in total pay; and lenders cut its interest by $20. The owners keep the multiple of 10. What is the firm's value after the program?

  • A) $4,000
  • B) $5,000
  • C) $5,200
  • D) $6,200

Answer this question and see the worked solution

Concepts tested

More questions from this set