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2. You are considering purchasing an insurance policy for your office as per your business plan. The policy has an annual cost of P 100,000.00. If you do not purchase the insurance and minor fire damage occurs to the office, a cost of P 1,000,000.00 is anticipated; the cost if major or total destruction occurs is P 2,000,000.00. Your local fire inspector tells you that on the average, offices of your kind have a 3% chance of having minor fire accidents in a year and a 1% chance for a major one. Would you purchase an insurance policy for your office? Show your solution.

2. You are considering purchasing an insurance policy for your office as per your business plan. The policy has an annual cost of P 100,000.00. If you do not purchase the insurance and minor fire damage occurs to the office, a cost of P 1,000,000.00 is anticipated; the cost if major or total destruction occurs is P 2,000,000.00. Your local fire inspector tells you that on the average, offices of your kind have a 3% chance of having minor fire accidents in a year and a 1% chance for a major one. Would you purchase an insurance policy for your office? Show your solution.

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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2. You are considering purchasing an insurance policy for your office as per your business plan. The policy has an annual cost of P 100,000.00. If you do not purchase the insurance and minor fire damage occurs to the office, a cost of P 1,000,000.00 is anticipated; the cost if major or total destruction occurs is P 2,000,000.00. Your local fire inspector tells you that on the average, offices of your kind have a 3% chance of having minor fire accidents in a year and a 1% chance for a major one. Would you purchase an insurance policy for your office? Show your solution.
Transcribed Image Text:2. You are considering purchasing an insurance policy for your office as per your business plan. The policy has an annual cost of P 100,000.00. If you do not purchase the insurance and minor fire damage occurs to the office, a cost of P 1,000,000.00 is anticipated; the cost if major or total destruction occurs is P 2,000,000.00. Your local fire inspector tells you that on the average, offices of your kind have a 3% chance of having minor fire accidents in a year and a 1% chance for a major one. Would you purchase an insurance policy for your office? Show your solution.
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