A race-car driver wishes to insure his car for the racing season for $50,000. the insurance company estimates a total loss may occur with probability 0.002, a 50% loss with probability 0.01, and a 25% loss with probability 0.1, ignoring all other partial losses, what premium should the insurance company charge each season to realize an average profit of $500?

A race-car driver wishes to insure his car for the racing season for $50,000. the insurance company estimates a total loss may occur with probability 0.002, a 50% loss with probability 0.01, and a 25% loss with probability 0.1, ignoring all other partial losses, what premium should the insurance company charge each season to realize an average profit of $500?

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...

See similar textbooks

Similar questions

The 10-year survival rate for blood cancer is approximately 12%. If 145 people who have blood cancer are treated for the disease, calculate the probability that: (i) no one will survive for 10 years. (ii) not more than 4 will survive for 10 years.
Show your solution step by step
You purchase a brand new car for $15,000 and insure it. The policy pays 78% of the car's value if there is an issue with the engine or 30% of the car's value if there is an issue with the speaker system. The probability of an issue with the engine is 0.009, and the probability there is an issue with the speaker system is 0.02. The premium for the policy is p. Let X be the insurance company's net gain from this policy. (a) Create a probability distribution for X, using p to represent the premium on the policy. Enter the possible values of X in ascending order from left to right. P(X) (b) Compute the minimum amount the insurance company will charge for this policy. Round your answer to the nearest cent
A lottery offers one $2000 prize, one $900 prize and five $200 prizes.One thousand tickets are sold at $5 each. Find the expectation if a person buys oneticket.
A friend proposes a gamble to you. You roll 2 fair, six-sided dice, and add up the results of each die to find your total number. If your roll totals a 6 or 8, your friend pays you $30. If you roll any other total, you pay your friend $10. What is your expected payoff from playing this game 100 times?.
Solve the following problems completely. Box and round your final answer up to 4 decimal places. A wallet contains 8 P100 bills, 3 P200 bills, 4 P500 bills, and 2 P1000 bills. You randomly choose 9 bills without replacement. What is the probability that you will choose 2 P200 bills, 1 P1000 bill, 4 P100 bills, and 2 P500 bills?
At races, your horse, White Rum, has a probability of 1/20 of coming 1st, 1/10 of coming 2nd and a probability of ¼ in coming 3rd. First place pays $5,000 to the winner, second place $4,000 and third place $1,350. Hence, is it worth entering the race if it costs $1050?
Suppose an oil company is thinking of buying some land for $10,000,000. There is a 60%60% chance of economic growth and a 40%40% chance of recession. The probability of discovering oil is 44%44% when there is economic growth and 32%32% when there is a recession. If there is economic growth and the oil company discovers oil, the value of the land will triple. If they do not discover oil, the value of the land will decrease by 10%.10%. If there is a recession and the company discovers oil, the value of the land will increase by 50%.50%. If they do not discover oil, the land will decrease in value by 75%.75%. What is the expected value of the investment? Give your answer to the nearest dollar. Avoid rounding within calculations. $$ Select the correct interpretation of the expected value. The expected value represents what the actual investment value will be for this land purchase of $10,000,000. The company should make the investment because the expected value…
It is the beginning of September and you have been offered the following deal to go heli-skiing. If you pick the first week in January and pay for your vacation now, you can get a week of heli-skiing for $2,900. However, if you cannot ski because the helicopters cannot fly due to bad weather, there is no snow, or you get sick, you do not get a refund. There is a 30% probability that you will not be able to ski. If you wait until the last minute and go only if you know that the conditions are perfect and you are well, the vacation will cost you $4,600. You estimate that the pleasure you get from heli-skiing is worth $6,700 per week to you (if you had to pay more than that, you would choose not to go). If your cost of capital is 11% per year, should you book ahead or wait? You should because the NPV of this choice is $ book ahead wait (Round to two decimal places.)
solve the following
Please solve for all and explain each step
A and B throw a die for a stake of Rs.44,000, which is to be won by the player who first throws the number 5. If A takes the first throw, what are their expectations ?