I have a problem I just can not get the formula for. An Insurance company insure

Question

I have a problem I just can not get the formula for. An Insurance company insures a perssons antique coincollection worth $20,000for an annual premium of $300. If thecompany figures the the probability of the collection being stolenis 0.0002, what will be the company's expected profit? I know the answer is $260. I tried using expected valueformula and it just does not work. I have tried al night and justcan not compute the formula to obtain this ANSWER. pleasehelp I have a problem I just can not get the formula for. An Insurance company insures a perssons antique coincollection worth $20,000for an annual premium of $300. If thecompany figures the the probability of the collection being stolenis 0.0002, what will be the company's expected profit? I know the answer is $260. I tried using expected valueformula and it just does not work. I have tried al night and justcan not compute the formula to obtain this ANSWER. pleasehelp

Explanation / Answer

Isn't the probability 0.002?  If that's the case, then the expected profit would be $260.  Since 20,000(0.002) = 40.  So, 300 - 40 = 260.

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