An automobile insurance company estimates the following loss probabilities for the next year on a $25,000 sports car:
Possible losses
|
probabilities
|
Total loss
|
0.001
|
50% loss
|
0.01
|
25% loss
|
0.05
|
10% loss
|
0.10
|
How much annual premium should the company charge in order to average $600 profit per policy sold?