An insurance company knows that the average cost to build a home in a new California subdivision is ​$96,618 and that in any particular year there is a 1 in 3 chance of a wildfire destroying all the homes in the subdivision. Based on these data and assuming the insurance company wants a positive expected value when it sells​ policies, what is the minimum the company must charge for fire insurance policies in this​ subdivision?

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
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An insurance company knows that the average cost to build a home in a new California subdivision is ​$96,618 and that in any particular year there is a 1 in 3 chance of a wildfire destroying all the homes in the subdivision. Based on these data and assuming the insurance company wants a positive expected value when it sells​ policies, what is the minimum the company must charge for fire insurance policies in this​ subdivision?

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