The value of Peter's house has risen 10% a year for the last 3 years. if the value of Peter's home 3 years ago was $120,000.00,
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Answer:896.9
Step-by-step explanation:
Let x denotes excess premium over claims
, There are two possibilities
(i)Only husband survives
This can be possible with a possibility of 0.01
Claims=10,000
Premium collected
Thus x=1000-10,000=-9000
(ii)Both husband and wife survives
This can occur with a probability of 0.96
Here claims will be 0 as both survives
Premium taken=1000
thus x=1000
The probability that the husband survives is the sum of above cases
=0.96+0.01=0.97
Hence the desired conditional Expectation