Amount of claim Probability (to the nearest $50,000) The table shows claims and their probabilities for an insurance company. Use the table to answer parts a through c. $0 0.65 $50,000 0.22 $100,000 0.05 $150,000 0.03 $200,000 0.03 $250,000 0.02 a. Calculate the expected value. b. How much should the company charge as an average premium so that it breaks even on its claim costs? c. How much should the company charge to make a profit of $50 per policy?
Amount of claim Probability (to the nearest $50,000) The table shows claims and their probabilities for an insurance company. Use the table to answer parts a through c. $0 0.65 $50,000 0.22 $100,000 0.05 $150,000 0.03 $200,000 0.03 $250,000 0.02 a. Calculate the expected value. b. How much should the company charge as an average premium so that it breaks even on its claim costs? c. How much should the company charge to make a profit of $50 per policy?
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section: Chapter Questions
Problem 35T
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Transcribed Image Text:Amount of claim
(to the nearest
$50,000)
Probability
The table shows claims and their
probabilities for an insurance
company. Use the table to answer
parts a through c.
$0
0.65
$50,000
$100,000
$150,000
$200,000
$250,000
0.22
0.05
0.03
0.03
0.02
a. Calculate the expected value.
b. How much should the company charge as an average premium so that it breaks even on its claim costs?
c. How much should the company charge to make a profit of $50 per policy?
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