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What is the expected profit or loss

Problem:

An insurance policy sells for $1200. Based on past data, an average of 1 in 125 policy holders will file a $15000 claim, an average of 1 in 100 holders will file a claim of $40,000 and an average of 1 in 250 holders will file a claim of $80,000.

Q1. Find the expected value to the company of each policy sold.

Q2. If the company sells 10,000 policies what is the expected profit or loss?

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Accounting Basics: What is the expected profit or loss

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Accounting Basics: What is the expected profit or loss

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