The Amount of investment equals $974.83.
The continuous compound interest helps to calculate an investment that are reinvested into the balance over a infinite number of periods.
- The formula for continuous compound interest is A=P^e^(r*t)
Amount of investment = $535 * e^(6%*10)
Amount of investment = $535 * 1.82211880039
Amount of investment = $974.833558209
Amount of investment = $974.83
Therefore, the Option B is correct since the Amount of investment equals $974.83.
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Answer:
When it is skewed right or left with high or low outliers then the median is better to use to find the center. The best measure of spread when the median is the center is the IQR. As for when the center is the mean, then standard deviation should be used since it measure the distance between a data point and the mean.
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The premium that the insurance company should charge each year to realize an average profit of $500 is $6,900.
First step is to calculated the expected amount to pay
Expected amount=Total loss +50% loss+25% loss
Expected amount=$200,000(0.002)(1)+$200,000(0.01)(0.5)+$200,000(0.1)(0.25)
Expected amount=$400+$1,000+$5,000
Expected amount=$6,400
Second step is to calculate the premium
Premium=Expected amount+ Average profit
Premium=$6,400+$500
Premium=$6,900
Inconclusion the premium that the insurance company should charge each year to realize an average profit of $500 is $6,900.
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