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Mr. Maloy has just bought a new $30,000 sport utility vehicle. As a reasonably safe driver, he believes there is only about a 5% chance of being in an accident in the coming year. If he is involved in an accident, the damage to his new vehicle depends on the severity of the accident. The probability distribution of damage amounts (in dollars) is given in the file P09_54.xlsx. Mr. Maloy is trying to decide whether to pay $170 each year for collision insurance with a $300 deduct- ible. Note that with this type of insurance, he pays the first $300 in damages if he causes an accident and the insurance company pays the remainder.

Mr. Maloy has just bought a new $30,000 sport utility vehicle. As a reasonably safe driver, he believes there is only about a 5% chance of being in an accident in the coming year. If he is involved in an accident, the damage to his new vehicle depends on the severity of the accident. The probability distribution of damage amounts (in dollars) is given in the file P09_54.xlsx. Mr. Maloy is trying to decide whether to pay $170 each year for collision insurance with a $300 deduct- ible. Note that with this type of insurance, he pays the first $300 in damages if he causes an accident and the insurance company pays the remainder.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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| Mr. Maloy has just bought a new $30,000 sport utility vehicle. As a reasonably safe driver, he believes there is only about a 5% chance of being in an accident in the coming year. If he is involved in an accident, the damage to his new vehicle depends on the severity of the accident. The probability distribution of damage amounts (in dollars) is given in the file P09_54.xlsx. Mr. Maloy is trying to decide whether to pay $170 each year for collision insurance with a $300 deduct- ible. Note that with this type of insurance, he pays the first $300 in damages if he causes an accident and the insurance company pays the remainder.
Transcribed Image Text:| Mr. Maloy has just bought a new $30,000 sport utility vehicle. As a reasonably safe driver, he believes there is only about a 5% chance of being in an accident in the coming year. If he is involved in an accident, the damage to his new vehicle depends on the severity of the accident. The probability distribution of damage amounts (in dollars) is given in the file P09_54.xlsx. Mr. Maloy is trying to decide whether to pay $170 each year for collision insurance with a $300 deduct- ible. Note that with this type of insurance, he pays the first $300 in damages if he causes an accident and the insurance company pays the remainder.
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