An insurance policy sells for $1000. Based on past data, an average of 1 in 100 policyholders will file a $15,000 claim, an average of 1 in 200 policyholders will file a$30,000 claim, and an average of 1 in 400 policyholders will file an $80,000 claim. Find the expected value (to the company) per policy sold. If the company sells 20,000 policies, what is the expected profit or loss?The expected value is $(Simplify your answer.)The expected(Simplify your answer.)is $

Given data An insurance policy sells for $1000

Answered: An insurance policy sells for $1000.…

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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A company estimates that 0.8% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $250. If they offer a 2-year extended warranty for $35, what is the company's expected value of each warranty sold? Round your answer to the nearest cent.
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