An automotive insurance company has 25,000 policyholders. The accident rate is 0.07. The number of accidents the company will have to pay out for is (1)_____ . If the payout for each claim (after deductibles) is $8,000, the company’s total payouts will amount to $ (2)_____. If the company wants to keep a profit margin of 8%, the premium it must charge is $(3)_____. The company can set aside a maximum amount of $(4)_____ for this year’s investments.answer choices(1) A. 1250 B. 1500 C. 1750 D. 2000(2) A.10,000,000 B. 12,000,000 C.13,000,000 D. 13,000,000(3) A. 561.6 B. 583.2 C. 596.2 D. 604.8 (4) A. 40,000 B. 580,000 C. 905,000 D. 1,120,000pls help!!! ive tried this like 10 times!!!!!!!!!
Question
Answer:
An automotive insurance company has 25,000 policyholders. The accident rate is 0.07. The number of accidents the company will have to pay out for is (1)____.
25,000*.07
1750
Answer: C. 1750
If the payout for each claim (after deductibles) is $8,000, the company’s total payouts will amount to $ (2)_____.
8000*1750
Answer: 14,000,000
Not included in the choices
If the company wants to keep a profit margin of 8%, the premium it must charge is $(3)_____.
Answer: D. 604.8
Let X=premium
25,000(X)-14,000,000=net profit
(25,000X-14,000,000)/25,000X=.08
X=608.7
Nearest answer is D. 604.8
The company can set aside a maximum amount of $(4)_____ for this year’s investments.
Answer: D. 1,120,00025,000*604.8-14,000,000 15120000-14,000,000 1,120,000
solved
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10 months ago
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