Jim has a 5-year-old car in reasonably good condition. He wants to take out a $20,000 term (that is, accident benefit) car insurance policy until the car is 10 years old. Assume that the probability of a car having an accident in the year in which it is x years old is as follows: x = age56789P(accident)0.011820.012820.013860.015130.01602Jim is applying to a car insurance company for his car insurance policy. If the car insurance company wants to make a profit of $700 above the expected total losses of $1393, how much should it charge for the policy?Group of answer choices$701$693$713$703$705

To calculate the expected total losses, we need to multiply the probability of an accident in each…

Answered: Jim has a 5-year-old car in reasonably…

College Algebra

10th Edition

ISBN:9781337282291

Author:Ron Larson

Publisher:Ron Larson

Chapter8: Sequences, Series,and Probability

Section: Chapter Questions

Problem 41CT: On a game show, a contestant is given the digits 3, 4, and 5 to arrange in the proper order to form...

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Question

Jim has a 5-year-old car in reasonably good condition. He wants to take out a $20,000 term (that is, accident benefit) car insurance policy until the car is 10 years old. Assume that the probability of a car having an accident in the year in which it is x years old is as follows:

x = age	5	6	7	8	9
P(accident)	0.01182	0.01282	0.01386	0.01513	0.01602

Jim is applying to a car insurance company for his car insurance policy. If the car insurance company wants to make a profit of $700 above the expected total losses of $1393, how much should it charge for the policy?

Group of answer choices

$701

$693

$713

$703

$705

Expert Solution