A Relay Microchip in a Telecommunications Satellite Has a Life

question 1

Multiple Choice

A relay microchip in a telecommunications satellite has a life expectancy that follows a normal distribution with a mean of 70 months and a standard deviation of 3.1 month. When this computer-relay microchip malfunctions, the entire satellite is useless. A large London insurance company is going to insure the satellite for 50 million dollars. Assume that the only part of the satellite in question is the microchip. All other components will work indefinitely. If the satellite is insured for 71 months, what is the expected loss to the insurance company? Round to the nearest ten-thousand dollars.

• A)$21.80 million
• B)$31.32 million
• C)$18.68 million
• D)$6.32 million
• E)$28.20 million

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