An insurance company will insure a $75,000 Hummer for its full value against theft at a premium of $1500 per year.Suppose that the probability that the Hummer will be stolen is 0.0075. Find the premium that the insurance company should charge if its wants it's expected net profit to be $2000?
A)$1437.50
B)$2551.25
C)$2562.50
D)$2062.50

Question

Quizplus · Accepted Answer

2000 = (x-75000)(.0075)+ x (.9925)= .0075x - 562.5 + .9925x = 2562.5

An Insurance Company Will Insure a $75,000 Hummer for Its