The expected value of the motor home is $19,660 = (.02 x $3,000 + .98 x $20,000). Thus, fair insurance for the motor home would cost $340 = (.02 x $17,000), where $17,000 is the net loss from an accident.

The expected value of the motor home is $19,660 = (.02 x $3,000 + .98 x $20,000). Thus, fair insurance for the motor home would cost $340 = (.02 x $17,000), where $17,000 is the net loss from an accident.

• Expert Answer

Value 20 000 Salvage Value if destroyed 3 000 Net Loss 20 000 3 000 1 View the full answer