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A piece of equipment is being insured against early failure. The time from purchase until failure of the equipment is normally distributed with mean 4 years and standard deviation 1 year. The insurance will pay an amount A if the equipment fails during the first five years and it will pay an amount (A/2) if failure occurs during the sixth or seventh year. If failure occurs after that, no payment will be made. Calculate A such that the expected payment made under this insurance is 50.
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A piece of equipment is being insured against early failure. The time from purchase until failure of the equipment is normally distributed with mean 4 years and standard deviation 1 year. The insurance will pay an amount A if the equipment fails during the first five years and it will pay an amount (A/2) if failure occurs during the sixth or seventh year. If failure occurs after that, no payment will be made. Calculate A such that the expected payment made under this insurance is 50.
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This topic is locked and archived.
Archived Topic
Hi there,
This topic has been closed and archived due to inactivity or violation of community quality standards. No more replies are possible here.
Still interested in this question? Check out the "Best Topics" block above for a better discussion on this exact question, as well as several more related questions.