Business

Jaquan Walsh

15 January, 18:16

An auto insurance company is implementing a new bonus system. In each month, if a policyholder does not have an accident, they will receive a cash-back bonus of 5 from the company. Among the 1000 policyholder of the auto insurance company, 400 are classified as low-risk drivers and 600 are classified as high-risk drivers. In each month, the probability of zero accidents for high-risk drivers is 0.80 and the probability of zero accidents for low-risk drivers is 0.90. Calculate the expected bonus payment from the company to the 1000 policyholders in one year.

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