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 ($260 million) is .20, the probability of total loss of the facility ($960 million) is .20, and the probability of no loss is .60 Find the expected loss. (Input the amount as a positive value.) Expected Loss 24 million k aces
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 ($260 million) is .20, the probability of total loss of the facility ($960 million) is .20, and the probability of no loss is .60 Find the expected loss. (Input the amount as a positive value.) Expected Loss 24 million k aces
MATLAB: An Introduction with Applications
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Contingency Table
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Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
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![### Homework: Chapter 6 (Sections 6.1 through ...)
---
#### Question 4
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 ($260 million) is 0.20, the probability of total loss of the facility ($960 million) is 0.20, and the probability of no loss is 0.60.
**Problem:**
Find the expected loss. (Input the amount as a positive value.)
- **Expected Loss:** \$ \_\_\_\_\_ million
---
### Explanation
To calculate the expected loss for Oxnard Petro Ltd., you need to use the formula for expected value in the context of probabilities and outcomes. The formula is:
\[ \text{Expected Loss} = (P_1 \times L_1) + (P_2 \times L_2) + (P_3 \times L_3) \]
Where:
- \( P_1, P_2, P_3 \) are the probabilities of the different outcomes.
- \( L_1, L_2, L_3 \) are the respective losses corresponding to those probabilities.
In this problem:
- \( P_1 \) = 0.20, \( L_1 \) = \$260 million (loss of superstructure),
- \( P_2 \) = 0.20, \( L_2 \) = \$960 million (loss of entire facility),
- \( P_3 \) = 0.60, \( L_3 \) = \$0 million (no loss).
Substitute these values into the formula to calculate the expected loss:
\[ \text{Expected Loss} = (0.20 \times 260) + (0.20 \times 960) + (0.60 \times 0) \]
\[ \text{Expected Loss} = 52 + 192 + 0 \]
\[ \text{Expected Loss} = 244 \]
So, the expected loss is \$244 million.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F506f7e18-7d44-4980-81d1-fed35e14e4cf%2Fdf885db0-6d71-4c2b-9a8b-2a5f7d38bdd6%2F3oly7q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Homework: Chapter 6 (Sections 6.1 through ...)
---
#### Question 4
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 ($260 million) is 0.20, the probability of total loss of the facility ($960 million) is 0.20, and the probability of no loss is 0.60.
**Problem:**
Find the expected loss. (Input the amount as a positive value.)
- **Expected Loss:** \$ \_\_\_\_\_ million
---
### Explanation
To calculate the expected loss for Oxnard Petro Ltd., you need to use the formula for expected value in the context of probabilities and outcomes. The formula is:
\[ \text{Expected Loss} = (P_1 \times L_1) + (P_2 \times L_2) + (P_3 \times L_3) \]
Where:
- \( P_1, P_2, P_3 \) are the probabilities of the different outcomes.
- \( L_1, L_2, L_3 \) are the respective losses corresponding to those probabilities.
In this problem:
- \( P_1 \) = 0.20, \( L_1 \) = \$260 million (loss of superstructure),
- \( P_2 \) = 0.20, \( L_2 \) = \$960 million (loss of entire facility),
- \( P_3 \) = 0.60, \( L_3 \) = \$0 million (no loss).
Substitute these values into the formula to calculate the expected loss:
\[ \text{Expected Loss} = (0.20 \times 260) + (0.20 \times 960) + (0.60 \times 0) \]
\[ \text{Expected Loss} = 52 + 192 + 0 \]
\[ \text{Expected Loss} = 244 \]
So, the expected loss is \$244 million.
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