Major automobile insurance companies are now offering telematics, technology that collects information about an individual’s driving behavior. In exchange, the companies reward good driving behavior with policy discounts or cash back awards. If, on average, good driving reduces the likelihood of an accident that would cost the company $1700 eight years from now, how much of an annual discount could the insurance company give to just break even at an interest rate of 10% per year?
Major automobile insurance companies are now offering telematics, technology that collects information about an individual’s driving behavior. In exchange, the companies reward good driving behavior with policy discounts or cash back awards. If, on average, good driving reduces the likelihood of an accident that would cost the company $1700 eight years from now, how much of an annual discount could the insurance company give to just break even at an interest rate of 10% per year?
Chapter2: Loads On Structures
Section: Chapter Questions
Problem 1P
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Major automobile insurance companies are now offering telematics, technology
that collects information about an individual’s driving behavior. In exchange, the
companies reward good driving behavior with policy discounts or cash back awards. If,
on average, good driving reduces the likelihood of an accident that would cost the
company $1700 eight years from now, how much of an annual discount could the
insurance company give to just break even at an interest rate of 10% per year?
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