An insurance company is setting out its policy for the next year. The chance that a customer (on average) survives another year is 0.96. The policy is sold for $85 per month for the entire year ($85*12 per year). If the customer does not survive another year, the company will pay $200,000 to the beneficiaries. What is the expected value of profit/loss for this company?

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

1.true 2.false? ? i think. .

step-by-step explanation:

there should be an link icon on the bottom of the text box you get. it looks like a paperclip!