Question

An Insurance company offers to pay Php 400,000 for the damages incurred, while the policy costs Php 10,000. The probability that the company will need to pay the amount of insurance is 0.3%. Complete the probability distribution below to find the expected value.

Answer 1

From the given data ,we frame the following table :

Let X be the amount the company will need to pay and P(X) is its probability.

Expected value = $\sum {x*P(X)}$ = $8800