Major automobile insurance companies are now offering telematics, technology that collects information about an individual’s driving behavior. In exchange, the companies reward good driving behavior with policy discounts or cash back awards. If, on average, good driving reduces the likelihood of an accident that would cost the company $1700 eight years from now, how much of an annual discount could the insurance company give to just break even at an interest rate of 10% per year?

Major automobile insurance companies are now offering telematics, technology that collects information about an individual’s driving behavior. In exchange, the companies reward good driving behavior with policy discounts or cash back awards. If, on average, good driving reduces the likelihood of an accident that would cost the company $1700 eight years from now, how much of an annual discount could the insurance company give to just break even at an interest rate of 10% per year?

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

5th Edition

ISBN:9781305084766

Author:Saeed Moaveni

Publisher:Saeed Moaveni

Chapter20: Engineering Economics

Section: Chapter Questions

Problem 25P

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