Answer: $68.4
Explanation:
Given: Annual Premium = $110
Average insurance payout = $1600
Likelihood of having an accident= 2.6% = 0.026 [we divide perecnt by 100 to convert it into decimal]
Then, Expected value = (Annual Premium) - (Likelihood of having an accident) x (Average insurance payout )
= $110 - (0.026) x ($1600)
= $(110-41.6)
= $68.4
Hence, the company's expected value of this insurance policy : $68.4