Question

The premium on an insurance policy is 20% for the first year, 15% on the 2nd year, and 10% for the third year. Find the total premium paid for a policy of $40,000.

Answer 1

Given that

The premium on an insurance policy is 20% for the first year, 15% for the 2nd year, and 10% for the third year. And the policy is of $40000

Explanation -

The premium paid for 1st year is 20% i.e

$\begin{gathered} Premium\text{ for 1st year = 20\% of \ 40000} \\ Premium\text{ for 1st year =}\frac{20}{100}\times40000=20\times400=\text{ \ }8000 \\ TOTAL\text{ AMOUNT = \ 40000 + \ 8000 = \ 48000} \\ Prem\imaginaryI um\text{ for 2nd year=15}\operatorname{\%}\text{of}\operatorname{\ }\text{\times48,000} \\ Prem\mathrm{i}um\text{ for 2nd year=}\frac{15}{100}\times48000=15\times480=\text{ \ 7200} \\ NEWAMOUNT\text{ = \ 48000 + \ 7200= \ 55200} \\ Prem\mathrm{i}um\text{ for 3rd year=10\% of 55200} \\ Prem\mathrm{i}um\text{ for 3rd year=}\frac{10}{100}\times55200\text{ = }10\times552=\text{ \ 5520} \end{gathered}$

So the total premium paid will be $8000 + $7200 + $5520 = $20720

Hence, the final answer will be $20720