What insurance protects against liability for harm the insured may cause to others as a result of product failure or accidents?

You have two contracts available to you: ONE is a perpetuity with cash flows of $500 per year, with the first cash flow beginning today. TWO is a perpetuity with cash flows of $500 per year, with the first cash flow beginning one year from today

Which has a greater present value if the required rate of return is 5%? A) Contract ONE is preferred because it has a present value that is $500 greater than contract TWO. B) Contract TWO is preferred because it has a present value that is $500 greater than contract ONE. C) Contract ONE is preferred because it has a present value that is $476.19 greater than contract TWO. D) Because these are perpetuities with equal required rates of return, they have equal value.

Which of the following is a good reason to use divisional costs of capital?

A) Division managers have no vested interest in underestimating the capital costs associated with their division. B) Divisional costs of capital reduce are relatively easy to estimate. C) Comparison firms are often engaged in various lines of business. D) The divisions of a company represent well-defined lines of business with different risk characteristics, for example oil and gas exploration and distribution through pipelines.