A farmer purchases a 5 year insurance policy that covers crop destruction due to hail. Over the 5 year period, the farmer will receive a benefit of 20 for each year in which hail destroys his crop, subject to a maximum of 3 benefit payments. The probability that hail will destroy the farmer’s crop in any given year is 0.5, independent of any other year.
Calculate the expected benefit that the farmer will receive over a 5 year period.
I got 26.875. Find the probabily it of how many times it'll hail during the 5 years (1,2,3,4 or 5 times) using the binomial distribution and mulitiply the amount of payout for each option, keeping in mind that even if it hails 4 or 5 times, he'll still only be paid 60(dollars?).
*EDIT*Sorry, I just checked my math on that, apparetnly, I can't add. It should be 45.625.
20 what? Dollars? That seems a bit low. Get the rest and I'll plug it into a chart
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