> > Through years of experience, you have learned that a $2,000 milling machine suffers a catastrophic failure (it is a total loss) about once in 5 years.

Through years of experience, you have learned that a $2,000 milling machine suffers a catastrophic failure (it is a total loss) about once in 5 years.

An insurance salesman offers to sell you coverage that will replace...

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Through years of experience, you have learned that a $2,000 milling machine suffers a catastrophic failure (it is a total loss) about once in 5 years.

An insurance salesman offers to sell you coverage that will replace the machine.
The annual premium for the coverage is $1,800.
Is this insurance a good deal?

Answer

$1,800 annual cost for insurance.
Your machine is expected to break down once every 5 years.
5 x 1,800 = $9,000 The insurance is not a good deal because it would cost less to replace the machine itself, paying the $2,000 price then paying the insurance for 5 years, which would be $9,000.

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Virtual Teaching Assistant: Colleen R.
Question Level: Basic
Karma: Free
Upload Date: 5/31/2017

This 53 words question was answered by Colleen R. on StudySoup on 5/31/2017. The question contains content related to Business Since its upload, it has received 111 views.

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