Solve the problem.
-An insurance company says that at age 50 one must choose to take $\$ 10,000$ at age $60, \$ 30,000$ at 70 , or $\$ 50,000$ at 80 ( $\$ 0$ death benefit). The probability of living from 50 to 60 is .83 , from 50 to 70 , .61, and from 50 to $80,0.47$. Find the expected value at each age.
A) 60 - $8300
70 - $14,100
80 - $23,500
B) 60 - $6100
70 - $18,300
80 - $23,500
C) 60 - $8300
70 - $24,900
80 - $41,500
D) 60 - $8300
70 - $18,300
80 - $23,500

Question

Quizplus · Accepted Answer

The expected value is calculated by multiplying the amount by the probability of living to that age. For age 60: $10,000 * 0.83 = $8,300. For age 70: $30,000 * 0.61 = $18,300. For age 80: $50,000 * 0.47 = $23,500.

Solve the Problem $10,000\$ 10,000$10,000 At Age 60,$30,00060, \$ 30,00060,$30,000 At 70 , Or

Solve the Problem $\$ 10,000$ At Age $60, \$ 30,000$ At 70 , Or