If after 5 years, 25 of the 1,000 people registered with Bracken have gone through surgery, where does Bracken stand in terms of gains or losses? A. $41,100 B. $39,700 C. −$36,600 D. −$37,500 E. −$43,000

"Atrap and Bracken are two rival insurance companies. Atrap and Bracken have premiums of $150 and $100 and deductibles of $2,500 and $3,500 respectively. The average expense of surgery is $25,000. If after 5 years, 25 of the 1,000 people registered with Bracken have gone through surgery, where does Bracken stand in terms of gains or losses?A. $41,100B. $39,700C. −$36,600D. −$37,500E. −$43,000Answer:Option DBracken's loss over 5 years is $37,500 Solution:According to question, Atrap and Bracken have premiums of $150 and $100 and deductibles of $2,500 and $3,500 respectively The number of people registered with Bracken are 1000 So, In 5 years Bracken would have earned an income of:[tex](100 \times 1000 \times 5)=\$ 500,000[/tex]Now, if 25 out of 1000 registered have undergone surgery. Average surgery expense given to be $25,000  Out of which $3,500 is deductible.   So Bracken's total expense per client is (25,000 - 3,500) = $21,500For 25 patients, it will be [tex](21500 \times 25)=\$ 537,500[/tex]From above we found expenses of $537,500 is more than income of $500,000, Bracken incurs a loss of $37,500 (500,000 - 537,500) over 5 years. Therefore, Bracken's loss over 5 years is $37,500