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# Lee Colle insures its students for thefts up to \$1000. The college mak

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Manager
Joined: 29 May 2008
Posts: 109
Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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01 Sep 2009, 12:32
1
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00:00

Difficulty:

75% (hard)

Question Stats:

32% (02:59) correct 68% (02:17) wrong based on 26 sessions

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Lee Colle insures its students for thefts up to \$1000. The college makes no profit but sets the premium to cover administrative costs of 10% on average claim of \$120. If the annual premium per students is 24\$. What is the expected number of thefts per 100 students per year?

A) 12
B) 14
C) 16
D) 18
E) 20
Manager
Joined: 12 Aug 2009
Posts: 79
Re: Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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01 Sep 2009, 18:41

assume x is number of theft per year

24*100=120*1.1*x -> x = ~18
Intern
Joined: 30 Jun 2009
Posts: 43
Re: Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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02 Sep 2009, 06:36
dolly12 wrote:

assume x is number of theft per year

24*100=120*1.1*x -> x = ~18

What does 24*100 stand for?
Manager
Joined: 29 May 2008
Posts: 109
Re: Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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02 Sep 2009, 06:47
Oh my goodness this one was tough
Manager
Joined: 10 Aug 2009
Posts: 124
Re: Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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02 Sep 2009, 07:15
1
defoue wrote:
dolly12 wrote:

assume x is number of theft per year

24*100=120*1.1*x -> x = ~18

What does 24*100 stand for?

These are premiums paid to insurance company or in other words, revenues of an insurance company. The right side of the equation represents its costs - claims paid by insurance company plus administartive costs associated with these claims. Since there are no profits, revenues=costs.
Manager
Joined: 10 Jul 2009
Posts: 141
Re: Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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02 Sep 2009, 07:44
Good question. +1 from me
Intern
Joined: 30 Jun 2009
Posts: 43
Re: Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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02 Sep 2009, 08:10
LenaA wrote:
defoue wrote:
dolly12 wrote:

assume x is number of theft per year

24*100=120*1.1*x -> x = ~18

What does 24*100 stand for?

These are premiums paid to insurance company or in other words, revenues of an insurance company. The right side of the equation represents its costs - claims paid by insurance company plus administartive costs associated with these claims. Since there are no profits, revenues=costs.

Thx LenaA. very clear now!!!!
Director
Joined: 23 Apr 2010
Posts: 542
Re: Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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09 Sep 2010, 03:07
I don't think that the GMAT will ask these kind of questions. Why post them here at all?
Intern
Joined: 27 Jun 2018
Posts: 1
Re: Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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28 Sep 2018, 23:20
Why did you multiply 1.1?

Posted from my mobile device
Manager
Joined: 10 Sep 2015
Posts: 73
Location: India
Concentration: Finance, Human Resources
GMAT 1: 640 Q47 V31
GPA: 4
Re: Lee Colle insures its students for thefts up to \$1000. The college mak  [#permalink]

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30 Sep 2018, 09:32
Let there be X thefts.

So total claims = 120*X

annual premium is 24 and for 100 students, total money = 2400

120X + 12X = 2400
132X= 2400
X= 18
Re: Lee Colle insures its students for thefts up to \$1000. The college mak   [#permalink] 30 Sep 2018, 09:32
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