Hi Guys I need Helpwith: 1) A 28-year-old man pays$208 for a one-year life insur

Question

Hi Guys I need Helpwith:

1) A 28-year-old man pays$208 for a one-year life insurance policy with coverage of$110,000. If the probability that he will live through the year is0.9993, what is the expected value of the insurancepolicy?

Actually I have the ANSWERSfor this: $131.00

What I need is how you can dothis problem? The Steps Please Show All Work

2) A casino roulette wheelhas 38 slots that are numbered 1 through 38. You pay $3 to place abet. If the outcome of the roulette spin in a number that is amultiple of 8, you receive $24 (which makes your net gain $21);otherwise you lose the $3 that you pay to place a bet. What is theexpected value of your net gain in this game?

Actually I have the ANSWERSfor this: 0.95 repairs

What I need is how you can dothis problem? The Steps Please Show All Work, ThankYou

Explanation / Answer

(1) Take into consideration the fact that he has actually spentmoney for the insurance policy, as well as the probability that hewill need to use the policy. If the probability that he will survive is 0.9993, the probabilitythat he will not survive would be (1-0.9993=.0007) Expected value is determined by multiplying the potential outcomeby the probability that it will occur: So, the expected value for his death is:          E(x)=110,000(.0007)=77 Remember that he paid the premium of $208, with the probabilitythat he would survive being 0.9993 So, the expected value for his survival is:           E(x)=208(0.9993)=207.8544 Since we are trying to find the expected value of the overallpolicy, we would subtract the two expected values shown above:                           $207.8544 -$77.00 = $130.8544 ˜ $131.00

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