A company estimates that 0.6% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $250. If they offer a 2 year extended warranty for $39, what is the company's expected value of each warranty sold? LA $

College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter8: Sequences And Series
Section8.4: Mathematics Of Finance
Problem 2E
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A company estimates that 0.6% of their products will fail
after the original warranty period but within 2 years of the
purchase, with a replacement cost of $250.
If they offer a 2 year extended warranty for $39, what is
the company's expected value of each warranty sold?
Transcribed Image Text:A company estimates that 0.6% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $250. If they offer a 2 year extended warranty for $39, what is the company's expected value of each warranty sold?
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