The number of accidents the company will have to pay out for is 1,750. If the payout for each claim (after deductibles) is $8,000, the company’s total payouts will amount to $14,000,000. If the company wants to keep a profit margin of 8%, the premium it must charge is $604.8. The company can set aside a maximum amount of $1,120,000 for this year’s investments.
1.) 25,000 policyholders x 7% accident rate = 1,750 2.) 8,000 payout x 1,750 number of accidents = 14,000,000 3.) 14,000,000 expense x (1 + 8% profit margin) = 15,120,000 / 25,000 policy holders = 604.8 4.) 8,000 x 8% profit margin = 640 (which is higher than the premium) x 1,750 numer of accidents = 1,120,000 (I'm not so sure with this one tho)
Hey, do you mean what is the final charge? If so, then look at my next steps
If you mean the final charge then first multiply 10% by 360 , basically 10/100 multiplied by $360 which is equals to $36. Since it is interest, add $36 to $360. The answer will be $396. Then you add on the $19 which would bring the total to $415.
Hehe I am no expert but this is what I did . Tried my best