SOLUTION: A store offers extended warranty on refrigerators for $75. If the average repair cost $400 and 2% of the people who buy the warranty have refrigerators that require repair, what is

Question 866342: A store offers extended warranty on refrigerators for $75. If the average repair cost $400 and 2% of the people who buy the warranty have refrigerators that require repair, what is the store's expected profit per extended warranty?
Answer by ewatrrr(24785) (Show Source): You can put this solution on YOUR website!



Hi

E = .98*75 - .02*325 = $67 

RELATED QUESTIONS

An appliance store sells additional warranties on its refrigerators. twenty percent of... (answered by ikleyn)
On average, the probability that a computer breaks down in its second year of use is... (answered by edjones)
2.)Suppose the warranty period on your family�s new television is about to expire and you  (answered by stanbon)
A company estimates that 0.2% of their products will fail after the original warranty... (answered by ikleyn)
A company estimates that 0.2% of their products will fail after the original warranty... (answered by Boreal)
A company estimates that 0.8% of their products will fail after the original warranty... (answered by Boreal)
A company estimates that 0.5% of their products will fail after the original warranty... (answered by ikleyn)
A company estimates that 0.5% of their products will fail after the original warranty... (answered by ikleyn)
A company estimates that 0.3% of their products will fail after the original warranty... (answered by ikleyn)