The Probability of a Randomly Selected Car Crashing During a Year

question 22

Essay

The probability of a randomly selected car crashing during a year is 0.0423 (based on data from the Statistical Abstract of the United States). If a family has three cars, find the
probability that at least one of them has a crash during the year. Is there any reason why
this probability might be wrong?

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Definitions:

Interest Rates

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal.

Nominal Rate

The interest rate set by the lending institution, not adjusted for inflation, representing the actual yearly cost of funds over the term of a loan.

Compounding Period

The period of time after which interest is credited to the depositor’s account for purposes of computing subsequent interest.

Interest Rate

The percentage charged on a loan or paid on savings over a specific period, usually expressed as an annual percentage of the principal.