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An insurance company issues a one-year $1,000 policy insuring against an occurrence A that historically happens...

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Basic Math

An insurance company issues a one-year $1,000 policy insuringagainst an occurrence A that historically happens to 3 out of every100 owners of the policy. Administrative fees are $25 per policyand are not part of the company's "profit." How much should thecompany charge for the policy if it requires that the expectedprofit per policy be $60? [HINT: If C is the premium for thepolicy, the company's "profit" is C ? 25 if A does not occur, and C? 25 ? 1,000 if A does occur.]

=$?

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