Question 1195336
**1. Calculate Probabilities:**

* **Probability of a composition shingle roof claim:** 7 claims / 10,000 policies = 0.0007
* **Probability of a shake roof claim:** 11 claims / 10,000 policies = 0.0011

**2. Calculate Expected Payout per Policy**

* **Expected payout for composition shingle roof claims:** 
    * Probability * Payout amount = 0.0007 * $8000 = $5.60
* **Expected payout for shake roof claims:** 
    * Probability * Payout amount = 0.0011 * $12,000 = $13.20
* **Total expected payout per policy:** $5.60 + $13.20 = $18.80

**3. Calculate Expected Profit per Policy**

* **Expected profit per policy:** Premium - Expected payout = $150 - $18.80 = $131.20

**4. Calculate Expected Annual Profit for 1000 Policies**

* **Expected annual profit:** Expected profit per policy * Number of policies = $131.20 * 1000 = $131,200

**Therefore:**

* The company's expected profit per year of a storm insurance policy is $131.20.
* The expected annual profit for 1000 such policies is $131,200.