Lesson 4 Expected Value Problems ( yells 7 . When all factors are taken into account , an insurance company estimates that the probability of my father making a claim for damages to his pontoon boat for $5000 is 0 . 1 , and that the probability of the pontoon boat being totally destroyed is . 005 . Should that tragedy happen , the company will have to pay $15 , 000 . The company charges my father $1000 for the insurance policy . What is the expected value of this policy to my father ?! Step 1 : Build the probability model that describes this situation :" Amount Probability Product \\Amt ( prob ) 5000 10. 1 15000 1 005 Step 2 : Find the Expected Value to my father ( amt . 1 ) ( prob . 1 ) + ( amt_ 2 ) ( prob. 2 ) + etc Step 3 : Find the Expected Value to the Insurance Company Step 4 : Interpret the Expected Values ( )