Question

Out of 5000 policies for cell phones, a company received 585 claims. The average amount paid on the claims was $80. If the annual cost of the policy was $48, what was a customers expected value of the cell phone insurance policy?

$9.36

$5.13

-$38.64

$9.36​

Answer 1

-38.64

Explanation:

% of claim: 385/ 5000 = .117

Average : $80 * .117 = $9.36

Customers' value: 9.36 - 48 = - 38.64