QUESTION 15 Information for Question 15 - 16: Erinn must decide whether to add the cost of towine insurance to her car insurance policy. The additional cost is $50 annually. She has an older car that is not super reliable. She decides analyze her expected annual towing costs and then she will decide whether it is cost effective for her to buy the towing insurance or not. She estimates the probability that her car will break down and need to be towed once during the year is 0.15. She also estimates that the probability that it will need to be towed twice during the vear is 0.10. Lastly, she believes that it is extremely unlikely that it will need to be towed more that twice, so she assigns probability of 0 to having the car towed more than twice. The typical price of towing a vehicle in CT is approximately $225.00, Let the random variable X- Erinn's towing charges annually. To begin her analysis she completes the table below: X- Amount Spent on Towing Probability Erinn's car does not need to be towed $0.00 Erinn's car needs to be towed once during the year Erinn's car needs to be towed twice during the year Calculate E(X). (Note: E0) - her expected average annual towing charges.) O a. $78.75 O b. $45.00 O c. $240.00 O d. $62.00 O e. $24.00

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Estimation

A new framework of data analysis where the new statistical methods are used for interpreting the results and analyzing the data is known as estimation in statistics.