Statistics
1) Laura McCarthy, the owner of Riverside Bakery, has been approached by insurance underwriters trying to convince her to purchase flood insurance. According to local meterologist, there is a 0.01 probability that the river will flood next year. Riverside's profits for the coming year depend on whether Laura buys the flood insurance and whether the river floods. The profits (which take into consideration the $10,000 premium for the flood insurance) for the four possible combinations of Laura's choice and river conditions are:
The River
Does not flood Floods
Insurance No flood
Decision Insurance $200,000 $1,000,000
Get flood Insurance $190,000 $200,000
a) If Laura decides not to purchase flood insurance, use the approach discrete probability
distribution to determine Riverside's expected profit next year.
b) If Laura purchases the flood insurance, what will be Riverside's expected profit next year?
c) Given the results in parts (a) and (b), provide Laura with a recommendation

As I understand it, the four possibilities flood/noflood combined with buy/notbuy
That said, I am at a loss trying to understand profit outcomes.
However, just compare the expected values of profits under two scenario: 1) she buys, and 2) she doesnt buy.
Under 1) she buys, her expected value is .01*(profit with flood  premium) + .99*(profit no flood  premium)
take it from here.posted by economyst

An investment counselor would like to meet with 12 of his clients on Monday, but he has time for only 8 appointments. How many different combinations of the clients could be considered for inclusion into his limited schedule for that day?
posted by Jacquelym
Respond to this Question
Similar Questions

Statistics
) Laura McCarthy, the owner of Riverside Bakery, has been approached by insurance underwriters trying to convince her to purchase flood insurance. According to local meteorologists, there is a 0.01 probability that the river will 
Bible Study
The fact that the Flood lasted over a year is? 1. a geological evidence for the local flood theory. 2. an evidence from Genesis for the local flood theory. 3. an objection to the local flood theory. 4. all of these. I think it is 
ACCOUNTING
On July 1, 2011 you purchase and pay $36,000 for a three year insurance policy. How much will your insurance expense be this year and during the following three years under the cash and accrual basis methods? At December 31 of 
statistics
The probability that a 30year old white male will live another year is .99842. What premium would an insurance company charge to break even on a 1year $1 million dollar term life insurance policy? 
math
The river rose 4 feet above flood stage last night. If a= the river’s height at flood stage, b= the river’s height now (the morning after), which equations below say the same thing as the statement? Explain your choices by 
economics
(Insurance) Let X = R+. Consider a house owner whose house has a risk of burning down with probability 0.001. If the house burns down it is worth $0 otherwise it is worth $1 million. The owner of the house is an expected utility 
chemistry help!
The Colorado River is diverted to flood fields. If the river is flowing at 17,600 ft3/s , how long will it take to flood a 5500 acre field to a depth of 2.00 meters? Note that 1 acre=43560ft2. 
Statistics
A life insurance company sells a term insurance policy to a 21yearold male that pays $100,000 if the insured dies within the next 5 years. The probability that a randomly chosen male will die each year can be found in mortality 
insurance
of 500 employees a firm 280 have a life insurance policy, 400 have a medical insurance cover and 200 participate in both programmes. what is the probability that a randomly selected employee will be a participant in at least one 
statistics
Drivers pay an average of (mean $690) per year for automobile insurance the distribution of insurance payments is approximately normal with a standard deviation of 110 dollars. What proportion of drivers pay more than 100 dollars