Math  /  Word Problems

QuestionA company estimates a 0.3%0.3\% product failure rate after warranty, costing \400.Ifa2yearwarrantycosts$57,findtheprofitvalues400. If a 2-year warranty costs \$57, find the profit values x,theirprobabilities, their probabilities P(x)$, and the expected value per warranty sold, rounded to the nearest cent.

Studdy Solution
Calculate the expected value of the profit.
(x)=$3430.003+$570.997=$56.27(x) = -\$343 \cdot0.003 + \$57 \cdot0.997 = \$56.27The company's expected value of each warranty sold is $56.27.

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