PAM3240 Risk Management and Policy
The employer faces a 30 percent income tax rate and has an annual discount rate of 5 percent. Assume that maintenance and retained work-injury losses are realized at the end of the year, that insurance premiums are paid at the beginning of the year, and that income taxes are paid at the end of the year. Assume that the cost of implementing the ventilation system is realized at the beginning of the first year, and that 1/5 of the total costs of the system can be deducted from taxable income (as depreciation) in each of the five years (not 100% in the first year).
- Calculate the annual net savings from the ventilation system.
- Calculate the present value of the after-tax net annual savings from the ventilation system over the five years of its operation.
- Calculate the present value of the after-tax purchase cost of the ventilation system.
- Do your calculations suggest that the ventilation system should be introduced? Demonstrate and explain.
- Does changing the firm’s income tax rate to 15% affect your recommendation? Demonstrate and explain. (note: if you do the problem using Excel this sensitivity check should be easy to calculate).
- Ignoring the changes you made in part e, does changing the firm’s annual discount rate to 10% affect your recommendation? Demonstrate and explain. (note: if you do the problem using Excel this sensitivity check should be easy to calculate).
- What other considerations should the risk manager include in his calculations and/or report to management about this decision?
Using the simulation worksheet in the Excel file accompanying this problem set, construct by simulation the estimated true probability distribution of total accident costs for the firm, based on the observed data from the past year. What is the simulated mean and standard deviation of total accident costs?
What is the maximum probable loss (MPL) at the (approximate) 99% confidence level? What is the (approximate) probability that total accident costs will exceed $300,000? What is the (approximate) probability that total accident costs will exceed $1,000,000?
[Note: because simulation outcomes change each time the file isopened, save your results in a separate worksheet using the “values and formats” option in Excel. Submit both the “working” worksheet and the “results” worksheet.] c. Suppose that the firm believes that total accident costs have a Normal distribution with mean equal to the sample mean in part a. and standard deviation equal to the sample standard deviation in part a. What is the maximum probable loss (MPL) at the 99% confidence level? What is the probability that total accident costs will exceed $300,000? What is the probability that total accident costs will exceed $1,000,000?
Now suppose that firm believes that total accident costs have a Lognormal distribution with mean equal to 3.2 and standard deviation equal to 5.2 (this is based on the observed sample data, converting to natural logs). What is the maximum probable loss (MPL) at the 99% confidence level? What is the probability that total accident costs will exceed $300,000? What is the probability that total accident costs will exceed $1,000,000?
Answer:
It is the feeling of the national government and the educational community that developing children learn to respect and acknowledge healthy democratic procedures and understand why they are vital in shaping society to come. In that context, this assessment paper describes political literacy as restructuring the ancient civics courses. Shreds of evidence showing increased government involvement in enhancing awareness of political literacy throughout the country. For instance, America introduced a framework known as ‘Democracy and Education for Citizenship’ into its National Curriculum in which every student is expected to undergo. However, such advancements have created “moral panic” in society and government circles since the youth has become more alienated to political issues compared to other aspects of life.
According to the national education guidelines on legal education and
practices for the youth, developing proper institutional and legal frameworks are vital in ensuring that students have the rights to social security. A legal framework that is appropriate, as stipulated in the guidelines of the national education system, must establish entitlements that are transparent and clear. By doing so, such a framework will enable children (as entitled to legal benefits in the country), have the audacity to make claims whenever they feel pressed by certain legal issues or otherwise, get redress when their rights are violated. Apart from that, the government is championing for proper institutional and legal frameworks. It is so because the frameworks would help in establishing important responsibilities and roles of several stakeholders including designers of legal frameworks, administrators, as well as enforcers of social protection systems – all of which the youth will be part of. Therefore, it is important that such systems function effectively to avoid duplications, overlaps, and education gaps.
The following section will involve two practitioners, one in the legal field and the other in the political field. I used these interviews to elaborate on the aspect of market oversaturation, establish fundamental differences between a legal and a political science career, and Determine their perspectives on their fields of work. The questions asked are categorized into three main subjects, personal aspects of market oversaturation, fundamental aspects of law in the USA, and lastly, personal perspectives of the work area. The results of the interviews are as shown below:
- Interview with an attorney
Name of the Respondent: James Bruce
Occupation: Attorney
Place of Work: McKenzie Law Firm, Chicago
Question 1: What is your take on the issue of market oversaturation in the field of law in the USA?
Response: I believe that for many parts of our country as well as for a majority of law graduates, the current legal market is lousy. First, the number of parts and full-time graduates enrolled has reduced by 33% since 2011. On top of that, the country has registered a dipping number of law degrees completed. Another issue is the slow pace of hiring particularly full-time workers. Evidently, the number of salaried lawyers has reduced too. Contrary to that, those with sideline jobs has rapidly grown.
Question 2: Please elaborate on some of the main legal factors of American law.
Response: Lawyers or advocates need to do several things well to earn a name for themselves in this field. They should know how to:
- File complaints about clients
- Report clear criminal cases
- Perform adequate research on common laws
- Locate federal inmates among other activities.
Question 3: What is your personal take on the current state of affairs in your line of work?
Response: There are several legal implications that affect the economy of the country and the people of the USA in general. For instance, the right-to-work legislation makes the organizations of unions rather hard because they prohibit certain employment terms between workers and unions. They also prohibit the provision of support to workers e.g. dues. Another continued problem is legal discrimination.
- Interview with a Politician (Fundraiser)
Name of the Respondent: Raymon White
Occupation: Political Fundraiser
Question 1: What is your take on the issue of market oversaturation in the field of law in the USA?
Response: Political science tries to reconcile the problem of market oversaturation with political marketing. Politics develops a theoretical framework to demonstrate the manner in which politics could gear campaigns of addressing market overpopulation.
Question 2: Please elaborate on some of the main legal factors of American law.
Response: There are many political concerns affecting the operations of the government. For instance, the country’s foreign policies have created varied conditions such as dynastic ambitions and commercial rivalries.
Question 3: What is your personal take on the current state of affairs in your line of work?
Response: Currently, we are facing political strives because of the social and economic implications of the right-to-work legislation. Trade unions are holding demonstrations on the legal ramifications of the right-to-work legislation. Other political concerns are the health policies and immigration policies among others.
General Findings
|
|
Law Career |
Political Science Career |
|
A. An aspect of market oversaturation |
The current legal market is lousy, the number of parts and full-time graduates enrolled has reduced by 33% since 2011, and the country has registered a dipping number of law degrees completed. |
Political science tries to reconcile the problem of market oversaturation with political marketing. Politics develops a theoretical framework to demonstrate the manner in which politics could gear campaigns of addressing market overpopulation. |
|
B. Fundamental differences between a legal and a political science career |
Lawyers or advocates should know how to: - File complaints about clients - Report clear criminal cases - Perform adequate research on common laws - Locate federal inmates among other activities.
|
The country’s foreign policies have created varied conditions such as dynastic ambitions and commercial rivalries. |
|
C. Perspectives on fields of work |
The right-to-work legislation makes the organizations of unions rather hard because they prohibit certain employment terms between workers and unions.
|
Many political strives because of the social and economic implications of the right-to-work legislation. Other political concerns are the health policies and immigration policies among others. |
References
"Education Matters". Occupational Statistics and Employment Projections, Last modified 2017. https://www.bls.gov/careeroutlook/2016/data-on-display/education-matters.htm.
"Legal and Institutional Frameworks". Social Protection Human Rights, Last modified 2018. https://socialprotection-humanrights.org/key-issues/governance-accountability-and-democracy/legal-and-institutional-frameworks/.
"Legal Education System". Internationalstudents.Com, Last modified 2018. https://www.internationalstudent.com/study-law/legal-education-system/.
"The Top 5 Legal Issues Currently Facing US Employers", Last modified 2012. https://www.personneltoday.com/hr/the-top-5-legal-issues-currently-facing-us-employers/.
Bass, B. M. From transactional to transformational leadership: Learning to share the vision. Leadership: Understanding the dynamics of power and influence in organizations (Leadership, 2017) 318-333.
George, Wickersham. "Political Factors in American Foreign Policy". Foreign Affairs, Last modified 2018. https://www.foreignaffairs.com/articles/united-states/1932-10-01/political-factors-american-foreign-policy.
Herzberg, F. One more time: How do you motivate employees (Encyclopedia, 2017)
Kotter, J. P. John P. Kotter on what leaders really do. (Harvard Business Press, 2016)
McKenna E. Business Psychology and Organizational Behavior. (5th ed.) New York: Psychology Press, (Management Inc., 2013).
Wright, Joshua. "The Oversaturated Job Market For Lawyers Continues, And On-The-Side Legal Work Grows". EMSI, Last modified 2014. https://www.economicmodeling.com/2014/01/10/the-oversatured-job-market-for-lawyers-continues/.
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