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MotoWin Auto Superstore is thinking about offering a two-year limited warranty for $915 on all new cars of a certain model. The terms of the warranty would be that MotoWin would replace the car free of charge under certain, specified conditions. Replacing the car in this way would cost MotoWin $15,700. Suppose that under the warranty, there is a 6% chance that MotoWin would have to replace the car one time and a 94% chance they wouldn't have to replace the car. (If necessary, consult a list of formulas.). If MotoWin knows that it will sell many of these warranties, should it expect to make or lose money from offering them? How much? To answer, take into account the price of the warranty and the expected value of the cost from replacing the car. MotoWin can expect to make money from offering these warranties. In the long run, they should expect to make dollars on each warranty sold. O MotoWin can expect to lose money from offering these warranties. In the long run, they should expect to lose. dollars on each warranty sold. O MotoWin should expect to neither make nor lose money from offering these warranties.

MotoWin Auto Superstore is thinking about offering a two-year limited warranty for $915 on all new cars of a certain model. The terms of the warranty would be that MotoWin would replace the car free of charge under certain, specified conditions. Replacing the car in this way would cost MotoWin $15,700. Suppose that under the warranty, there is a 6% chance that MotoWin would have to replace the car one time and a 94% chance they wouldn't have to replace the car. (If necessary, consult a list of formulas.). If MotoWin knows that it will sell many of these warranties, should it expect to make or lose money from offering them? How much? To answer, take into account the price of the warranty and the expected value of the cost from replacing the car. MotoWin can expect to make money from offering these warranties. In the long run, they should expect to make dollars on each warranty sold. O MotoWin can expect to lose money from offering these warranties. In the long run, they should expect to lose. dollars on each warranty sold. O MotoWin should expect to neither make nor lose money from offering these warranties.

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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**MotoWin Auto Superstore is considering offering a two-year limited warranty for $915 on all new cars of a certain model.** The warranty includes free car replacement under specified conditions. The cost of replacing a car for MotoWin would be $15,700. Suppose there is a 6% chance that MotoWin will need to replace the car once and a 94% chance that they won’t need to replace it at all. **Question:** If MotoWin expects to sell many of these warranties, will they make or lose money from them? How much? **Instructions:** Consider the price of the warranty and the expected cost of car replacement. 1. **MotoWin can expect to make money from offering these warranties.** - In the long run, they should expect to make [ ] dollars on each warranty sold. 2. **MotoWin can expect to lose money from offering these warranties.** - In the long run, they should expect to lose [ ] dollars on each warranty sold. 3. **MotoWin should expect to neither make nor lose money from offering these warranties.** *(If necessary, consult a list of formulas.)*
Transcribed Image Text:**MotoWin Auto Superstore is considering offering a two-year limited warranty for $915 on all new cars of a certain model.** The warranty includes free car replacement under specified conditions. The cost of replacing a car for MotoWin would be $15,700. Suppose there is a 6% chance that MotoWin will need to replace the car once and a 94% chance that they won’t need to replace it at all. **Question:** If MotoWin expects to sell many of these warranties, will they make or lose money from them? How much? **Instructions:** Consider the price of the warranty and the expected cost of car replacement. 1. **MotoWin can expect to make money from offering these warranties.** - In the long run, they should expect to make [ ] dollars on each warranty sold. 2. **MotoWin can expect to lose money from offering these warranties.** - In the long run, they should expect to lose [ ] dollars on each warranty sold. 3. **MotoWin should expect to neither make nor lose money from offering these warranties.** *(If necessary, consult a list of formulas.)*
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