Question

There is a 10 percent chance that you will have healthcare bills of $200,000; a 20 percent chance that you will have bills of $10,000; a 59 percent chance that you will have bills of $1,000; and an 11 percent chance of having bills of $0. Your expected healthcare bills are Group of answer choices $22,590. $22,000. $20,590. $19,590.

Answer 1

Expected value of healthcare bills = $22590

Step-by-step explanation:

The expected value of the healthcare bills can be calculated by multiplying the probability of the a healthcare bill by the amount in case of that probability situation.

Expected value = pA * Amount in case of A + pB * Amount in case of B + ... + pN * Amount in case of N

Where,

p represents the probability of each scenario

Expected value of healthcare bills = 0.1 * 200000 + 0.2 * 10000 + 0.59 * 1000 + 0.11 * 0

Expected value of healthcare bills = $22590