SOLUTION: A company estimates that 0.8% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $50. If they offer a

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Question 1156564: A company estimates that 0.8% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $50.
If they offer a 2 year extended warranty for $5, what is the company's expected value of each warranty sold?
Answer by Boreal(15235) About Me  (Show Source):
You can put this solution on YOUR website!
E(X)=0.992*5-0.008*50, the random variable * its probability
=+$4.56