BUSN – Dilmar’s Safety First Corporation

1. Dilmar’s Safety First Corporation is evaluating the inclusion of a new safety id screening device. As the company risk manager you have to evaluate whether or not the new device is a good investment. Conduct a Net Present Value analysis. Determine whether or not the NPV analysis alone justifies the purchase of the new screening device.The particulars are: The screening device will cost $300,000. The maintenance will be $4,000 per year. The screening device needs special swipe cards that will cost $6,000 per year. It is expected that the insurance premium savings will be $40,000 per year. Loss reduction is expected to amount to $80,000 per year. The screening device has a seven year useful life with zero salvage value. The company is in the 35% tax bracket. Gerardo has determined that the cost of capital for the firm is the appropriate discount rate, that rate is 8%.PVA formula =PV=Time Zero (PV) Years (1-5) Equipment + Installation costsLoss Reduction Premium Savings Maintenance Other costs Before Tax cash flow Depreciation (straight line) Taxable base Taxes 35% Income after Taxes Depreciation Reversal After Tax cash flows PV discounting PV time zero cash flows $Depreciation (straight line= initial cost/ # of years of useful life)A. A health insurance policy contains a $200 calendar-year deductible, an 80 percent coinsurance provision, and a $2,500 out-of-pocket cap. If a $10,000 covered claim is the only claim made this year, the insurance company will payB. A health insurance policy contains a $200 per-cause deductible, a 75 percent coinsurance provision, and a $2,000 coinsurance cap. If a $10,000 covered claim is the only claim made this year, the insured would have to pay2. What is a qualified plan? What are the differences between a defined contribution and a defined benefit plan? What does ERISA stand for? What employee base is eligible for each of the following: 401(k), 403(b), and Keogh? What is vesting?