(E4.124)- Accident Insurance Accident records collected by an automobile insurance company give the following information: The probability that an insured driver has an automobile accident is .15; if an accident has occurred, the damage to the vehicle amounts to 20% of its market value with probability .80, 60% of its market value with probability .12, and a total loss with probability .08. What premium should the company charge on a $22,000 car so that the expected gain by the company is zero?
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