Actuaries A CEO is considering buying an insurance policy to cover possible losses incurred by marketing a new product. If the product is a complete failure, a loss of $800,000 would be incurred; if it is only moderately successful, a loss of $250,000 would be incurred. Insurance actuaries have determined that the probabilities that the product will be a failure or only moderately successful are .01 and .05, respectively. Assuming that the CEO is willing to ignore all other possible losses, what premium should the insurance company charge for a policy in order to break even?
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