Question
A company estimates that 0.4% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $300.
If they offer a 2 year extended warranty for $46, what is the company's expected value of each warranty sold?
If they offer a 2 year extended warranty for $46, what is the company's expected value of each warranty sold?
Answers
John1
.004(-300)+.996(46)
tatiana
iS IT 44.616
John1
Yes
jake
john failed, thanks for the way to figure it out, used it on my online quiz and was wrong.