Answer:
The company can expect to pay out $45,000 over the year after the policies were written.
Step-by-step explanation:
This can be determined as follows:
The probability that a person will die at age 20 = 0.0015
Revenue from 100 policies = 100 * $75,000 = $7,500,000
Revenue from 500 policies = 500 * $25,000 = $12,500,000
Revenue from 1000 policies = 1000 * $10,000 = $10,000,000
Total revenue from all policies = Revenue from 100 policies + Revenue from 500 policies + Revenue from 1000 policies = $7,500,000 + $12,500,000 + $10,000,000 = $30,000,000
Expected amount to pay out during the year the policies were written = Total revenue from all policies * The probability that a person will die at age 20 = $30,000,000 * 0.0015 = $45,000
Therefore, the company can expect to pay out $45,000 over the year after the policies were written.
