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A private pilot wishes to insure his airplane for $200,000. The insurance company estimates that a total loss will occur with probability 0.002, a 50% loss with probability 0.05, and a 25% loss with probability 0.2. Ignoring all other partial losses, what premium should the insurance company charge each year to realize an average profit of $600? each year. The insurance company should charge $ (Type an integer or a decimal. Round to the nearest dollar as needed.)

A private pilot wishes to insure his airplane for $200,000. The insurance company estimates that a total loss will occur with probability 0.002, a 50% loss with probability 0.05, and a 25% loss with probability 0.2. Ignoring all other partial losses, what premium should the insurance company charge each year to realize an average profit of $600? each year. The insurance company should charge $ (Type an integer or a decimal. Round to the nearest dollar as needed.)

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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**Problem Description:** A private pilot wishes to insure his airplane for $200,000. The insurance company estimates that a total loss will occur with a probability of 0.002, a 50% loss with a probability of 0.05, and a 25% loss with a probability of 0.2. Ignoring all other partial losses, what premium should the insurance company charge each year to realize an average profit of $600? --- **Solution:** The insurance company should charge $____ each year. *(Type an integer or a decimal. Round to the nearest dollar as needed.)*
Transcribed Image Text:**Problem Description:** A private pilot wishes to insure his airplane for $200,000. The insurance company estimates that a total loss will occur with a probability of 0.002, a 50% loss with a probability of 0.05, and a 25% loss with a probability of 0.2. Ignoring all other partial losses, what premium should the insurance company charge each year to realize an average profit of $600? --- **Solution:** The insurance company should charge $____ each year. *(Type an integer or a decimal. Round to the nearest dollar as needed.)*
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