Based on historical data, assume you have estimated the average dollar amount of loss per claim for the nextcouple of years (see the table below). How much money should you budget today (year 2022) for claims in2022 and 2023 associated with products sold in 2021 (first two cells in the last column of the following table)?Assume the interest rate is 6% for the next five years. The following table is supposed to help you achieve thefinal answers.Yearint rate $ per claim tPV ($ perclaim)Number ofClaimsPV of claims2022 6.00% $11,900 02023 6.00% $12,50012024 6.00% $12,9002OA) 95,268 and 65,578.71OB) 103,512 and 75,269.53OC) 107,576 and 68,278.29D) 114,255 and 71,632.54Show Transcribed TextงThis question is related to the above question. How much money should you budget today (year 2022) forclaims in 2024 and over all the years together (2022-2024) associated with products sold in 2021 (last twocells in the last column of the table in the last question)? Assume the interest rate is 6% for the next fiveyears.OA) 235,933.52 and 411,787.81OB) 256,524.79 and 435,875.62OC) 268,784 23 and 458,971.34OD) 289,548 65 and 487,549 37

The answer is C) 107,576 and 68,278.29.Here's how to calculate the present value (PV) of claims for…

Answered: Based on historical data, assume you…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.6P

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Provide an example of a real-world application in finance or economics where bounded summation is used to calculate the present value of future cash flows.

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