1. Assume that the daily probabilty of a major earthquake in Los Angeles is .07 persent. the chance of your computer center being damaged during such a quake is 5 percent. If the center is damaged, the average estimated damage will be $1.2 million.
a) Calculate the expected loss (dollars)
b) An insurance agent is willing to insure your facility for an annual fee of $15,000. Analyze the offer, and discuss whether to accept it.