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APPLICATION Heritage Finance Corporation, as a car insurance company, offers an amount of P600,000 for a damaged car beyond repair in an accident. Marco, a client costs him to pay Php 25,000 yearly and the probability that the company will pay the amount of insurance is 0.003. A. What is the probability that the company will NOT pay any amount to its client within a year? B. What is the expected value of the insurance to its buyer? C. Was it an advantage of the client? Why?
because Expected profit is the probability of receiving a profit multiplied by the profit, by the payoff, and the expected cost is the probability that certain costs will be incurred multiplied by that cost.
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