Ask Question
BusinessBusiness
15 January, 19:09

Assume that a firm, StableCo, faces a 0.4% chance of filing for bankruptcy per month. Over the course of 25 years, what is the probability that StableCo will file for bankruptcy?

+5
Answers (1)
  1. 15 January, 21:00
    0
    The probability that StableCo will file for bankruptcy over the course of 25 years is 9.53%.

    Explanation:

    We have the probability of StableCo still operates normally in the business in one year is: 100%-0.4% = 99.60%.

    So, the cumulative probability of StableCo still operates normally in the business for 25 years: 99.6% ^25 = 90.47%.

    => The probability that StableCo will file for bankruptcy over the course of 25 years = 100% - the cumulative probability of StableCo still operates normally in the business for 25 years = 100% - 90.47% = 9.53%.

    So, the answer is 9.53%.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Assume that a firm, StableCo, faces a 0.4% chance of filing for bankruptcy per month. Over the course of 25 years, what is the probability ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
When a firm prepares financial reports by using absorption costing, a. profits will always decrease with decreases in sales. b. profits will always increase with increases in sales. c.
Answers (1)
Which of the following is an example of strategic entry deterrence? A. building excess capacity B. price reductions C. economies of scale D. both b and c E. both a and b
Answers (1)
The gain on sale of equipment is deducted from net income to arrive at operating cash flows because a. the sale of long-term assets is an operating activity. b. the gain reveals the total cash received. c.
Answers (1)
Suppose that the government enacts a tax on retail sales of road salt, which homeowners and businesses put on walkways and driveways. Assume that the supply of salt is perfectly elastic, due to the ease with which suppliers can stockpile the product.
Answers (1)
Given the following information, aggregate income equals: Profits $700 Rent 400 Compensation to employees 2,500 Interest 300 Taxes 1,000 Transfer payments 500 a. $4,400. b. $3,900. c. $3,400. d. $2,900.
Answers (1)
New Questions in Business
If the absolute price of a new car is $40,000 and the relative price of a laptop computer in terms of cars is 1/20 of a car, it follows that the absolute price of a laptop is $10,000. $1,000. $4,000. $2,000.
Answers (1)
Apple has combined some of its tangible resources (such as financial resources and research laboratories) and intangible resources (such as scientists, engineers, and organizational routines) to create a capability in r&d which creates a core
Answers (1)
What factors are taken into account when valuing publicly traded stock?
Answers (1)
Gonzales Corporation generated free cash flow of $88 million this year. For the next two years, the companyʹs free cash flow is expected to grow at a rate of 10%.
Answers (1)
Panda Inc. had total sales of $24,000 from bamboo bowls in 2017. The company sold 6,000 units of bamboo bowls and the total variable costs were $6,000. What is the %C of each bamboo bowl?
Answers (1)
Home » Business » Assume that a firm, StableCo, faces a 0.4% chance of filing for bankruptcy per month. Over the course of 25 years, what is the probability that StableCo will file for bankruptcy?
Sign Up Forgot Password?