document.write( "Question 1183609: I am using the expected value formula for this and am not solving it properly, can someone please help me with setting it this problem up correctly? Thanks in advance.\r
\n" ); document.write( "\n" ); document.write( "A 40-year-old man in the U.S. has a 0.241% risk of dying during the next year . An insurance company charges $260 per year for a life-insurance policy that pays a $100,000 death benefit. What is the expected value for the person buying the insurance? Round your answer to the nearest dollar. \n" ); document.write( "

Algebra.Com's Answer #814005 by ikleyn(52802) $\"\"$ $\"About$

You can put this solution on YOUR website!
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\n" ); document.write( "I am using the expected value formula for this and am not solving it properly,
\n" ); document.write( "can someone please help me with setting it this problem up correctly? Thanks in advance.
\n" ); document.write( "A 40-year-old man in the U.S. has a 0.241% risk of dying during the next year .
\n" ); document.write( "An insurance company charges $260 per year for a life-insurance policy that pays a $100,000 death benefit.
\n" ); document.write( "What is the expected value for the person buying the insurance? Round your answer to the nearest dollar.
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document.write( "The person pays  $260  to cover next year for a life-insurance policy.\r\n" );
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document.write( "In case of his (or her) death, which may happen with the probability of 0.241% next year, the family will get $100000.\r\n" );
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document.write( "Math expectation of it is  0.00241*100000 = 241  dollar.\r\n" );
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document.write( "So, the  expected value  for the person  is  241 - 260 = - 19 dollars.\r\n" );
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document.write( "    In other words, the person pays $19 to the insurance company for the peace in his (or her) mind.\r\n" );
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document.write( "    The company collect these $19 for its functioning, paying staff and benefits.\r\n" );
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\n" ); document.write( "\n" ); document.write( "Solved and explained.\r
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