SOLUTION: A company estimates that 0.2% 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
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If they offer a
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Question 1125178: A company estimates that 0.2% 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 $21, what is the company's expected value of each warranty sold? Answer by Boreal(15235) (Show Source):
You can put this solution on YOUR website! They get $21 per warranty
They pay out 250*0.002=$0.50
The expected value is the difference or $20.50.
