Question

Please don't copy paste. answer what goes in each columns

Bespin Car Rental predicts that the annual probability of one of its cars being destroyed in a crash is 1 in 1,000,000. If destroyed, the value of the property damage to the car equals $45,000. Assume that there are no partial losses; the car is either destroyed in a crash or suffers no loss.

1. A) Show the physical damage loss distribution for Bespin Car Rental’s automobiles and calculate the expected value of the physical damage loss.
2. B) Show the calculations for the variance and the standard deviation.

Column 1	Column 2	Column 3	Column 4	Column 5
Loss outcomes	Probabilities	Loss Outcome - Expected Loss	Squared Difference	Squared Difference x Probability
Sum
Variance
Standard Deviation
Column 1	Column 2	Column 3	Column 4	Column 5
Loss outcomes	Probabilities	Loss Outcome - Expected Loss	Squared Difference	Squared Difference x Probability
Sum
Variance
Standard Deviation

Answer 1

P(Loss) = 1/1000000 =		0.000001
P(No loss) = 1 - 0.000001 =		0.999999
Expected value of the loss = $45000 * 0.000001 + $0 * 0.999999 = $0.045

Loss outcomes	Probabilities	Loss outcome - Expected loss	Squared difference	Squared difference * Probability
45000	0.000001	$ 44,999.96	$2,024,995,950.00	$2,025.00
0	0.999999	-$0.05	$0.00	$0.0020
		Sums =	$ 2,024,995,950.00	$2,025.00

Variance =	$2,025.00
Standard deviation = √variance = $45