Help with this please i dont understand
1 answer:
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Answer:
The expected loss is $6980
Step-by-step explanation:
From the question we are told that
The chance that a customer survives another year is p =0.96
The rate at which the policy is sold is r = $85 per month
The rate at which the policy is sold per year is R = $85 * 12 per year
= $1020 per year
The amount paid the the beneficiaries is $200,000
The expected value of profit/loss for this company is mathematically represented as
substituting values
- $6980
The negative sign shows that it is a loss