Thome and Crede, CPAs, are preparing their service revenue (sales) budget for the coming year (2020). The practice is divided in
1 answer:
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Answer:
The household should not buy this policy
Explanation:
The probability of burglary is
$200,000 * 0.02 = $4,000
The insurance policy costs $15,000
The loss probability is lower than the cost of insurance policy
E(U) = (Jewelry Worth - Jewelry loss due to burglary + Insurance cover - Insurance policy cost) * 0.5
E(U) $200,000 - $70,000 + $70,000 - $15,000
E(U) = $
E(U) $430.11