(Answered) A health insurance company charges policyholders a 1250

Statistics

A health insurance company charges policyholders a $1250 annual premium for health insurance for hospitalization. The company estimates that each time a patient is hospitalized costs the company $2500. Furthermore, they have estimated that 85% of patients will not be hospitalized, 10% will be hospitalized once a year, and no one will be hospitalized more than twice.

(a) Find the insurance company's expected profit per policyholder.

(b) What is the expected profit if they enroll 80,000 policyholders?

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