What premium amount should company charge


Let x be the damage incurred(in $) in a certain type of accident during a given year. Possible X values are 0, 1000, 5000, and 10000, with probabilities .8, .1, .08, and .02, respectively. A particular company offers a 500$ deductible policy. If the company wishes its expected profit to be $100, what premium amount should it charge?

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