QuestionA company expects $0.7\%$ of products to fail after warranty, costing \$250. They sell a \$39 warranty. Find profit$x$ values and expected value.

Studdy Solution
Calculate the expected value of the profit.
$$(x) = -\$211 \cdot0.007 + \$39 \cdot0.993 = \$38.26$$The company's expected value for each warranty sold is $38.26.