Jim has a 5-year-old car in reasonably good condition. He wants to take out a $2

Question

Jim has a 5-year-old car in reasonably good condition. He wants to take out a $20,000 term (that is, accident benefit) car insurance policy until the car is 10 years old. Assume that the probability of a car having an accident in the year in which it is x years old is as follows: xagc P(accident) Jim is applying to a car insurance company for his car insurance policy. If the car insurance company wants to make a profit of $900 above the expected total 0.01191 0.01292 0.01396 0.01503 0.01613 losses, how much should it charge for the policy? Round your answer to the nearest dollar $2301 $2294 52292 $229 e $2299

Explanation / Answer

Expected losses = 0.01191+0.01292+0.01396+0.01503+0.01613)*20000 = $1399

Charge = $1399+900 = $2299

Option E is Correct

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