State Farm Insurance has developed the following table to
describe the distribution of automobile collision claims paid
during the past year.
Payment($) 
Probability 
0 
0.83 
500 
0.06 
1,000 
0.05 
2,000 
0.02 
5,000 
0.02 
8,000 
0.01 
10,000 
0.01 
(a) 
Set up a table of intervals of random numbers that can be used
with the Excel VLOOKUP function to generate values for automobile
collision claim payments. Round your answers to two decimal places.
If your answer is zero enter “0”. 


(b) 
Construct a simulation model to estimate the average claim
payment amount and the standard deviation in the claim payment
amounts. 

Round your answers to the nearest whole number. 

Average: 
$ 
Standard Deviation: 
$ 

(c) 
Let X be the discrete random variable representing the dollar
value of an automobile collision claim payment. Let, , , . . .
, represent possible values of . Then, the mean () and
standard deviation () of can be computed as , and . What
are the average and the standard deviation for the analytical
model? 

Round your answers to the nearest whole number. 

Average: 
$ 
Standard Deviation: 
$ 
