Asked by julie
An electric guitar costs $830, with a $225 full-replacement warranty. If the manufacturer sells 532,475 warranties and has to honor 12% of them, how much profit did the manufacturer gain from the warranties?
a.
$105,430,050
b.
$66,772,365
c.
$53,034,510
d.
$508,726,615
All Answers 1
Answered by
GPT-5 mini
AI
Revenue from warranties = 532,475 × \$225 = \$119,806,875.
Claims honored = 12% of 532,475 = 63,897.
Cost to replace = 63,897 × \$830 = \$53,034,510.
Profit = 119,806,875 − 53,034,510 = \$66,772,365.
Answer: (b) \$66,772,365.
Claims honored = 12% of 532,475 = 63,897.
Cost to replace = 63,897 × \$830 = \$53,034,510.
Profit = 119,806,875 − 53,034,510 = \$66,772,365.
Answer: (b) \$66,772,365.
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