Your son has just gotten his driver's license and your bank account is about to get a little (a lot?) lighter. To help mitigate the impact on your finances, you have opted for a high deductible auto insurance policy. The deductible on your policy is $4000, which means that you will pay the first $4000 of any damages and then the insurance will cover the rest. Because of this, if there is an accident for which the damages are less than $4000, you aren't even going to file a claim with the insurance company. The less they know, the better? You will just pay it out of pocket. You believe that any accident will result in a damage amount which is normally distributed with a mean of $4500 and a standard deviation of $1500. The value of your son's car is only $7500, so that is the upper bound on the damage amount because in that case, you can junk the car and buy a different one for $7500. The lower bound on damages is obviously $0. The probability of an automobile accident this year is 7.5%. Build a Monte Carlo simulation model to show your out of pocket expenses in this situation. If there is no accident, then there is no out of pocket expense. Analyze the results of the 1000 iterations to find the following as a percentage of the 1000 interactions: 1. how often a claim was filed (damage met deductible). 2. how often you ended up buying a different car. Also, calculate your expected out of pocket expense. For these three questions, put a cell reference in Cells B4:B6 to wherever you have calculated those values in your spreadsheet so that I don't have to hunt for them.
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
Your son has just gotten his driver's license and your bank account is about to get a little (a lot?) lighter. To help mitigate the impact on your finances, you have opted for a high deductible auto insurance policy. The deductible on your policy is $4000, which means that you will pay the first $4000 of any damages and then the insurance will cover the rest. Because of this, if there is an accident for which the damages are less than $4000, you aren't even going to file a claim with the insurance company. The less they know, the better? You will just pay it out of pocket. You believe that any accident will result in a damage amount which is
Build a Monte Carlo simulation model to show your out of pocket expenses in this situation. If there is no accident, then there is no out of pocket expense.
Analyze the results of the 1000 iterations to find the following as a percentage of the 1000 interactions:
1. how often a claim was filed (damage met deductible).
2. how often you ended up buying a different car.
Also, calculate your expected out of pocket expense.
For these three questions, put a cell reference in Cells B4:B6 to wherever you have calculated those values in your spreadsheet so that I don't have to hunt for them.
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