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QUESTION

# A) Trustworthy Insurance Co. estimates that a certain home has a 1% chance of burning down in any one year. They calculated that would cost $120,000... A) Trustworthy Insurance Co. estimates that a certain home has a 1% chance of burning down in any one year. They calculated that would cost$120,000 to rebuild that home. Use expected values to determine annual insurance premium. Round your answer to the nearest dollar.

Answer: To make a profit, annual insurance premium should be more than $B) At a fundraiser, 5000 tickets are sold at$10 each for eight prizes: a new car worth $21,000, two European vacation worth$5000 each, and five cash prizes of $1000 each. You buy 1 ticket. What is the expected value of your gain? Enter your answer in dollars C) The world famous gambler from Philadelphia, Señor Rick, proposes the following game of chance. You roll a fair die. If you roll a 1, then Señor Rick pays you$25. If you roll a 2, Señor Rick pays you $5. If you roll a 3, you win nothing. If you roll a 4 or a 5, you must pay Señor Rick$10, and if you roll a 6, you must pay Señor Rick $15. Is Señor Rick loco for proposing such a game? Should you accept this game? Enter your answer in dollars D) Your company plans to invest in a particular project. There is a 35% chance that you will lose$30,000, a 40% chance that you will break even, and a 25% chance that you will make \$55,000. Based solely on this information, what should you do?