An Insurance Company Insures 100,000 Cars in a Certain Area

question 64

Multiple Choice

An insurance company insures 100,000 cars in a certain area. The company has determined that on average, each year they will have to pay the following amounts for accidents in the area: ​
$100,000 with probability 0.0004
$50,000 with probability 0.001
$25,000 with probability 0.006
$5000 with probability 0.011
$1000 with probability 0.023
​
What is the company's expected payout per car each year?
​

• A)$318.00
• B)$4163.00
• C)$4140.00
• D)$381.60
• E)$279.84