Oxnard Petro Ltd. is buying hurricane insurance for its off-coast oil drilling platform. During the next five years, the probability of total loss of only the above-water superstructure ($310 million) is .20, the probability of total loss of the facility ($810 million) is .20, and the probability of no loss is .60. Find the expected loss. (Input the amount as a positive value.)
Oxnard Petro Ltd. is buying hurricane insurance for its off-coast oil drilling platform. During the next five years, the probability of total loss of only the above-water superstructure ($310 million) is .20, the probability of total loss of the facility ($810 million) is .20, and the probability of no loss is .60. Find the expected loss. (Input the amount as a positive value.)
A First Course in Probability (10th Edition)
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ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
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Oxnard Petro Ltd. is buying hurricane insurance for its off-coast oil drilling platform. During the next five years, the probability of total
loss of only the above-water superstructure ($310 million) is .20, the probability of total loss of the facility ($810 million) is .20, and the
probability of no loss is .60.
Find the expected loss. (Input the amount as a positive value.)
Expected Loss
million
%24
Expert Solution
Step 1
| X (in Million) | P(X) |
| -310 | 0.2 |
| -810 | 0.2 |
| 0 | 0.6 |
E(X) = X1*P(X1)+X2*P(X2)+X3*P(X3)
= (-310*0.2)+(-810*0.2)+(0*0.6)
=-224
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