A company estimates that 0.4% of their products will fail afterthe original warranty period but within 2 years of thepurchase, with a replacement cost of $50.If they offer a 2 year extended warranty for $3, what is thecompany's expected value of each warranty sold?$Question Help: Video

p(FAILS WITHIN 2 YEAR)= p = 0.004 P(not fail) = 1-0.004 = 0.996 replacement cost $ 50 premium to…

Answered: A company estimates that 0.4% of their…

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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A company estimates that 0.4% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $50. If they offer a 2 year extended warranty for $3, what is the company's expected value of each warranty sold? $