Jon P. answered • 03/03/15

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1. The expected pay-out on each policy is 250 * 1/90 + 12000 * 1/100 + 17000 * 1/400 = $165. So that's what the premium would have to be in order to get a profit of 0.

2. The profit per policy is the premium the company receives minus the expected payout = 350 - 165 = $185.

3. The expected profit on 375 policies would be 375 * 185 = $69375