Dwizeel and Satellite Component are musicians who travel to concerts around the world by flying a private jet. They decided to purchase a life insurance policy that will pay 1,000,000 upon the first death of the two of them. The future lifetime (in years) of either Dwizeel or Satellite Component is exponential with hazard rate 0.0001, if death by means other than plane crash is considered. But the time until the crash of their plane follows the exponential distribution with mean 25 years, and is independent of any other causes of death of either Dwizeel or Satellite Component. Assume that, unfortunately, nobody survives their private plane crash if one happens. Let W represent the time of the first death. You are given that the present value of the benefit paid on this policy is 1000000e-0.05W. Find the expected value of the death benefit payment on this policy, i.e., the expected value of W. Possible Answers A 275,500 B 389,750 C 445,675 D 495,075 E 525,100
Dwizeel and Satellite Component are musicians who travel to concerts around the world by flying a private jet. They decided to purchase a life insurance policy that will pay 1,000,000 upon the first death of the two of them. The future lifetime (in years) of either Dwizeel or Satellite Component is exponential with hazard rate 0.0001, if death by means other than plane crash is considered. But the time until the crash of their plane follows the exponential distribution with mean 25 years, and is independent of any other causes of death of either Dwizeel or Satellite Component. Assume that, unfortunately, nobody survives their private plane crash if one happens. Let W represent the time of the first death. You are given that the present value of the benefit paid on this policy is 1000000e-0.05W. Find the expected value of the death benefit payment on this policy, i.e., the expected value of W. Possible Answers A 275,500 B 389,750 C 445,675 D 495,075 E 525,100
College Algebra (MindTap Course List)
12th Edition
ISBN:9781305652231
Author:R. David Gustafson, Jeff Hughes
Publisher:R. David Gustafson, Jeff Hughes
Chapter5: Exponential And Logarithmic Functions
Section5.2: Applications Of Exponential Functions
Problem 4E
Related questions
Question
8
Transcribed Image Text:Dwizeel and Satellite Component are musicians who travel to concerts around the
world by flying a private jet. They decided to purchase a life insurance policy that
will pay 1,000,000 upon the first death of the two of them. The future lifetime (in
years) of either Dwizeel or Satellite Component is exponential with hazard rate
0.0001, if death by means other than plane crash is considered. But the time until
the crash of their plane follows the exponential distribution with mean 25 years,
and is independent of any other causes of death of either Dwizeel or Satellite
Component. Assume that, unfortunately, nobody survives their private plane crash
if one happens. Let W represent the time of the first death. You are given that the
present value of the benefit paid on this policy is 1000000e-0.05W. Find the
expected value of the death benefit payment on this policy, i.e., the expected value
of W.
Possible Answers
A 275,500
B
389,750
445,675
D 495,075
E
525,100
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
College Algebra (MindTap Course List)
Algebra
ISBN:
9781305652231
Author:
R. David Gustafson, Jeff Hughes
Publisher:
Cengage Learning
College Algebra (MindTap Course List)
Algebra
ISBN:
9781305652231
Author:
R. David Gustafson, Jeff Hughes
Publisher:
Cengage Learning
Big Ideas Math A Bridge To Success Algebra 1: Stu…
Algebra
ISBN:
9781680331141
Author:
HOUGHTON MIFFLIN HARCOURT
Publisher:
Houghton Mifflin Harcourt
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill