The emu showman takes out insurance for each of his ten emus. The annual premium for...
The emu showman takes out insurance for each of his ten
emus.
The annual premium for each emu is $120. In case of an emu injury
or premature death, the insurance company will pay the emu showman
$17,000. The probability of an emu becoming injured or dying
prematurely is 0.00012.
What is the expected value for the showman for all ten of his emus?
Homework Answers
Expected value for each emus = 0.00012*$17,000 - $120 = -$117.96
Thus, the expected value for the showman for all ten of his emus
= -$1179.6
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The emu showman takes out insurance for each of his ten
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