In our amusement park that we built this week, the ride Diablo’s Domain had revenue of $250,000,000 in its first year as expected. The company paid $750,000 for insurance or $3 for every $1,000 in revenue. If the park is wildly successful and revenue increases by 25% in the second year and the rate of $3 for every $1,000 holds true, how much would it pay for insurance? Do you think it’s reasonable for insurance costs to increase proportionally? Why or why not?

The amount to be paid for insurance will be $ 937,500. In this context, it is reasonable that insurance costs increase proportionally, as the ride will have a greater use and, therefore, a greater exposure to risk.

Step-by-step explanation:

Given that the amusement park Diablo's Domain ride generated $ 250,000,000 in revenue, and the company paid $ 750,000 in insurance for that game ($ 3 for every $ 1,000 in profit), to determine the amount of insurance that should be paid if the winnings increase by 25% and the same proportion of 3/1000 to be paid is maintained, the following calculation must be made:

(250,000,000 x 1.25) x (3/1000) = X

312,500,000 x 0.003 = X

937,500 = X

Therefore, the amount to be paid for insurance will be $ 937,500.

college