An insurer sells policies to customers with this loss distribution:

$75,000 with probability 0.005

$50,000with probability 0.007

Loss = $25,000 with probability 0.030

$15,000 with probability 0.050

$ 0 with probability 0.908

a-What is the expected claim cost per policy?

b-If claims are paid one year after premiums are received and the interest rate is 4 percent, what is the discounted expected claim cost per policy?

c-If the only administrative cost is the cost of processing the application which is $100 per policy, and the fair profit loading is $45, what is the fair premium?