A company estimates that 0.9% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $200. If they offer a 2 year extended warranty for $32, what is the company's expected value of each warranty sold?

A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
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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 0.9% of their products will fail after the original warranty period but within 2
years of the purchase, with a replacement cost of $200.
If they offer a 2 year extended warranty for $32, what is the company's expected value of each warranty
sold?
Transcribed Image Text:A company estimates that 0.9% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $200. If they offer a 2 year extended warranty for $32, what is the company's expected value of each warranty sold?
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