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You're a small insurance company that insures 2000 people. Let's say that 1 house will flood per year, so the probability of a house flooding is (1/2000). Therefore, the probability of a house NOT flooding is (1999/2000). If a house floods, you have to pay $500,000. How much should you charge monthly in order to break even? $20.84 $41,687.51 $250.12 $68.32

You're a small insurance company that insures 2000 people. Let's say that 1 house will flood per year, so the probability of a house flooding is (1/2000). Therefore, the probability of a house NOT flooding is (1999/2000). If a house floods, you have to pay $500,000. How much should you charge monthly in order to break even? $20.84 $41,687.51 $250.12 $68.32

College Algebra (MindTap Course List)
College Algebra (MindTap Course List)
12th Edition
ISBN:9781305652231
Author:R. David Gustafson, Jeff Hughes
Publisher:R. David Gustafson, Jeff Hughes
Chapter8: Sequences, Series, And Probability
Section8.7: Probability
Problem 66E: Determine if the statement is true or false. If the statement is false, then correct it and make it...
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You're a small insurance company that insures 2000 people. Let's say that 1 house will flood per year, so the probability of a house flooding is (1/2000). Therefore, the probability of a house NOT flooding is (1999/2000). If a house floods, you have to pay $500,000. How much should you charge monthly in order to break even? $20.84 $41,687.51 $250.12 $68.32
Transcribed Image Text:You're a small insurance company that insures 2000 people. Let's say that 1 house will flood per year, so the probability of a house flooding is (1/2000). Therefore, the probability of a house NOT flooding is (1999/2000). If a house floods, you have to pay $500,000. How much should you charge monthly in order to break even? $20.84 $41,687.51 $250.12 $68.32
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