. An insurance company sells to 1500 individuals policies that protect their canoes against theft for a

period of 2 years. Based on a cost of $300 to replace a stolen canoe, the company determines that

it will break even if the probability of the theft of an individual's canoe during policy period is 0.15.

Assume that the probability of more than one theft per individual is 0

Question is:

(a) What should be the selling price of the insurance policy?

(b) If the probability of theft is actually 0.1, what is the company's expected gain per policy given

the selling price determined in (a)?