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Boat Insurance Maritime Insurance Company offers insurance policies for recreational boats. A typical policy will pay the replacement cost of $25,000...

Boat Insurance Maritime Insurance Company offers insurance policies for recreational boats. A typical policy will pay the replacement cost of $25,000 if the boat is a total loss. If the boat is not a total loss but the damage is more than $10,000, the policy pays $5,000. For damage under $10,000, no coverage is offered. The company estimates the probability of no damage to be 0.60, the probability of damage between $0 and $10,000 to be 0.25, and the probability of damage between$10,000 and $25,000 to be 0.12. If the company wants to make a profit of $200 above the expected cost, what should be the price of the policy?
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8436835.xlsx

prob
no damage
damage <10000
damage< 25000
damage >25000 payoff
0.6
0.25
0.12
0.03 0
0
10000
25000 0
0
1200
750
1950
expected money paid by the company = 1950=expectedcost ofa insurance...

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