Jude Owns a House Worth $250,000 in an Area That

Multiple Choice

Jude owns a house worth $250,000 in an area that is prone to tornadoes. Suppose there is a 5 percent chance during the next year that Jude's house will incur $50,000 of damage from a tornado and a 1 percent chance that his home will be completely destroyed by a tornado. What is the expected value of Jude's house next year?

A) $240,000
B) $245,000
C) $247,500
D) $230,000