Answer:
The company earns $91 through the year.
Step-by-step explanation:
We are given the following information in the question:
Here, the insurance premium paid is $181.
The probability of survival = 0.9994.
The probability of death = 1 - Probability of survival = 1 - 0.9994 = 0.0006
Thus, we can write,
The company earns $181 with probability 0.9994 and pays out ($150000-$181) = $149,819 with probability .006.
The expected value of the policy or the expected earning for the company can be calculated in the following manner:
Thus, the company earns $91 through the year.
Correct Answer: - 550
We can use the distributive property to distribute the summation to the variables and then get the constant out to apply the summation formulas as shown below in the attached image.
The equation editor does not have a summation symbol, so I have attached the solution using the image.
The correct answer to this question is -550. First option is the correct one.
