Posted by **john** on Saturday, June 26, 2010 at 1:16pm.

Jim has a 5-year-old car in reasonably good condition. He wants to take out a $30,000 term (that is, accident benefit) car insurance policy until the car is 10 years old. Assume that the probability of a car having an accident in the year in which it is x years old is as follows:

x = age

5

6

7

8

9

P (accident)

0.01191

0.01292

0.01396

0.01503

0.01613

Jim is applying to a car insurance company for his car insurance policy. If the car insurance company wants to make a profit of $900 above the expected total losses, how much should it charge for the policy? Round your answer to the nearest dollar

- statistic -
**DianeC**, Wednesday, April 11, 2012 at 8:53pm
expected payout

E[x] = 30,000(0.01191 + 0.01292 + 0.01396 + 0.01503 + 0.01613)

= $2,098.50

=> $2,099

charge needed for $900 profit

= $(2099 + 900)

= $2999

## Answer This Question

## Related Questions

- Statistics/Probability - 2. Jim has a 5-year old car in reasonably good ...
- FINAN & QUANTITATIVE LITERACY - You currently drive 288 miles per week in a car ...
- math - a new car depreciated by 20% in its first year. each succeeding year it ...
- statistic help pls - a car insurance company has determined that 6% of all ...
- math - David Salter has a personal automobile policy ( PAP) with coverage of $ ...
- math - The value of a car decreases at a constant rate as it grows older. When ...
- probability - You and your friend just rented a car for an 8,000 mile cross-...
- probability - You and your friend just rented a car for an 8,000 mile cross-...
- probability - You and your friend just rented a car for an 8,000 mile cross-...
- probability - You and your friend just rented a car for an 8,000 mile cross-...

More Related Questions