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1. On average, the expected value of returns from each $1 of premiums paid on an insurance policy is less than $1; this is due to the insurance company's administrative costs and profits. In spite of this fact, why do so many individuals and organizations purchase insurance policies?

2. Describe how certainty equivalent cash flow estimates can be derived for individual project cash flows.

3. Will all individuals apply the same certainty equivalent estimates to the cash flows from a project? Why or why not?

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Corporate Finance, Finance

Category:- Corporate Finance
Reference No.:- M92091031

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