The information provided is as follows: Assume that the daily probability of a major earthquake in Los Angeles is $.07$ percent. The chance of your computer center being damaged during such a quake is $5$ percent. If the center is damaged, the average estimated damage will be $\$4.0$ million.
The question is "to calculate the expected loss in dollars."
From the looks of it I would assume no calculation is to be done and the expected loss is $\$4$ million, but that seems too simple to be the correct answer.
I also performed this calculation with the feeling that $4$ million was too simple of an answer to get to. The expected loss in dollars is $51,100$ according to the $1.2775\%$ chance of this happening within a year. I got the $1.2775\%$ figure by multiplying the $.07\%$ chance and the $5\%$ chance ($0.0007\times 0.05 = 0.000035$) then multiplying the daily chance by $365$ days in a year to determine the yearly chance ($0.000035 \times 365 = 0.012775$). Then I got the $\$51,000$ figure by setting up the ratio of $\frac{1.2775}{100} = \frac{X}{4000000}$ and calculating for $X$.
Because the probability of an earthquake happening on a given day is $0.0007$, the probability of it not happening on a given day is $1$ - $0.0007$ = $0.9993$.
Using this number, we will calculate the probability of an earthquake not happening in a given year.
Let's say a year is $365$ days. Because in this question earthquakes are independent events, the probability that an earthquake would happen in a year would be $(0.9993)^{365}$, which is about $0.77$.
Remember, this is the probability that the earthquake does not happen.
The probability that it does happen is $1$ - $0.77$ = $0.23$.
Because the P(Earthquake hits your computer center) = $0.05$ and the average loss from it hitting the center is $4$ million dollars and that these events are all independent, your final answer is
$0.23$ $*$ $0.05$ $*$ $4,000,000$ = $46,000$