Question: For this problem, use the fact that the expected value of an event is a probability weighted average, the sum of each probable outcome multiplied

For this problem, use the fact that the expected value of an event is a probability weighted average, the sum of each probable outcome multiplied by the probability of the event occurring.

You own a house worth $200,000 that is located on a river. If the river floods moderately, the house will be completely destroyed. This happens about once every 20years. If you build a seawall, the river would have to flood heavily to destroy your house, which only happens about once every 100 years.

What would be the annual premium without a seawall for an insurance policy that offers full insurance?

Without a seawall, the annual premium is $

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