statistic

posted by .

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 -

    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

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. math

    The value of a car decreases at a constant rate as it grows older. When the car is 2 years old, it is worth $23,000. When the car is 5 years old it is worth $15,500. Write and equation relating y (value of the car $) to x (age of car). …
  2. statistic help pls

    a car insurance company has determined that 6% of all drivers were involved in a car accident last year,among the 12 drivers living on one particular street,3 were involved a car accident last year.if 12 drivers are randomly selected …
  3. math

    a new car depreciated by 20% in its first year. each succeeding year it depreciated by 10% assume the car is still in good working condition after 10 years. if the car costs $25,000 calculate the value of the car after 10 years. express …
  4. Statistics/Probability

    2. Jim has a 5-year old car in reasonably good condition. He wants to take out a $40,000 term (that is accident benefit) car insurance policy until the car is 10 years old. Assume that the probability of a car having and accident in …
  5. probability

    You and your friend just rented a car for an 8,000 mile cross-country road trip. Your rental car may be one of three different types: new (N), nearly one year old (O), and old (L). If the car you receive is brand new, it will break …
  6. probability

    You and your friend just rented a car for an 8,000 mile cross-country road trip. Your rental car may be one of three different types: new (N), nearly one year old (O), and old (L). If the car you receive is brand new, it will break …
  7. probability

    You and your friend just rented a car for an 8,000 mile cross-country road trip. Your rental car may be one of three different types: new (N), nearly one year old (O), and old (L). If the car you receive is brand new, it will break …
  8. probability

    You and your friend just rented a car for an 8,000 mile cross-country road trip. Your rental car may be one of three different types: new (N), nearly one year old (O), and old (L). If the car you receive is brand new, it will break …
  9. FINAN & QUANTITATIVE LITERACY

    You currently drive 288 miles per week in a car that gets 24 miles per gallon of gas. You are considering buying a new fuel-efficient car for $15,000 (after trade-in on your current car) that gets 48 miles per gallon. Insurance premiums …
  10. math

    The value of a car decreases at a constant rate as it grows older. When the car is 2 years old, it is worth $23,000. When the car is 5 years old it is worth $15,500. Write and equation relating y (value of the car $) to x (age of car).

More Similar Questions