Based on historical data, an insurance company estimates that a particular customer has a 2.7% likelihood of having an accident in the next year, with the average insurance payout being $1900. If the company charges this customer an annual premium of $200, what is the company's expected value of this insurance policy?

Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section: Chapter Questions
Problem 35T
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Based on historical data, an insurance company estimates that a particular customer has a 2.7% likelihood
of having an accident in the next year, with the average insurance payout being $1900.
If the company charges this customer an annual premium of $200, what is the company's expected value of
this insurance policy?
Transcribed Image Text:Based on historical data, an insurance company estimates that a particular customer has a 2.7% likelihood of having an accident in the next year, with the average insurance payout being $1900. If the company charges this customer an annual premium of $200, what is the company's expected value of this insurance policy?
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