The extended warranty on a $960 dishwasher is 21% of the purchase price and lasts for eight years. What is the effective cost per year of the extended warranty?

Question

a.
$28.80
b.
$45.20
c.
$23.78
d.
$25.20

Answer 1

To calculate the effective cost per year of the extended warranty on the dishwasher, we first need to determine the total cost of the warranty.

The extended warranty is 21% of the purchase price of the dishwasher:

1. Calculate the cost of the extended warranty: \[ \text{Warranty Cost} = \text{Purchase Price} \times \text{Warranty Percentage} \] \[ \text{Warranty Cost} = 960 \times 0.21 = 201.60 \]

2. Next, since the warranty lasts for eight years, we divide the total warranty cost by the number of years to find the effective cost per year: \[ \text{Effective Cost per Year} = \frac{\text{Warranty Cost}}{\text{Number of Years}} \] \[ \text{Effective Cost per Year} = \frac{201.60}{8} = 25.20 \]

Thus, the effective cost per year of the extended warranty is \( \text{$25.20} \).

The answer is: d. $25.20