document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=999963>Question 999963</A>: <I><SPAN STYLE=\"word-break: break-all;\"> 2.)Suppose the warranty period on your family’s new television is about to expire and you are debating about whether to buy a one-year maintenance contract for $35. If you buy the contract, all repairs for one year are free. Consumer information shows that 12% of the televisions like yours require an<BR>\n" );
document.write( "annual repair that costs $140 on the average. Would you advise buying the maintenance contract? Explain your reasoning </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #617533 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=617533\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Suppose the warranty period on your family’s new television is about to expire and you are debating about whether to buy a one-year maintenance contract for $35. If you buy the contract, all repairs for one year are free. Consumer information shows that 12% of the televisions like yours require an<BR>\n" );
document.write( "annual repair that costs $140 on the average. Would you advise buying the maintenance contract? Explain your reasoning <BR>\n" );
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document.write( "Expected cost of repair:: 0.12*140 = $16.80<BR>\n" );
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document.write( "Expected loss from contract:: 0.88*35 = 30.8<BR>\n" );
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document.write( "Expected value = 16.80-30.8 = -$14.00<BR>\n" );
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document.write( "Ans: Do not buy maintenance contract.<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H.<BR>\n" );
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