A private pilot wishes to insure his airplane for $400,000. The insurance company estimates that a total loss will occur with probability 0.006, a 50% loss with probability 0.04, and a 20% loss with probability 0.1. Ignoring all other partial losses, what premium should the insurance company charge each year to realize an average profit of $800?
A private pilot wishes to insure his airplane for $400,000. The insurance company estimates that a total loss will occur with probability 0.006, a 50% loss with probability 0.04, and a 20% loss with probability 0.1. Ignoring all other partial losses, what premium should the insurance company charge each year to realize an average profit of $800?
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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Transcribed Image Text:A private pilot wishes to insure his airplane for $400,000. The insurance company estimates that a total loss will occur
with probability 0.006, a 50% loss with probability 0.04, and a 20% loss with probability 0.1. Ignoring all other
partial losses, what premium should the insurance company charge each year to realize an average profit of $800?
The insurance company should charge $ each year.
(Type an integer or a decimal. Round to the nearest dollar as needed.)
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