An insurance policy covers a $20 000 sapphire ring against theft and loss. If the ring is stolen then the insurance company will pay the policy owner in full. If the ring is lost then they will pay the owner $8()00. From past experience, the insurance company knows that the probability of theft is 0.0025, and the probability of loss is 0.03. How much should the company charge to cover the ring in order that their expected return is $100?

An insurance policy covers a $20 000 sapphire ring
against theft and loss. If the ring is stolen then
the insurance company will pay the policy owner
in full. If the ring is lost then they will pay the
owner $8()00. From past experience, the insurance
company knows that the probability of theft is
0.0025, and the probability of loss is 0.03. How
much should the company charge to cover the ring
in order that their expected return is $100?