A company estimates that 0.5% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $200.

If they offer a 2 year extended warranty for $11, what is the company's expected value of each warranty sold?

Answers

Answer 1

Answer:

The company is expected to make [tex]\$ 1[/tex] on every extended warranty sold.

Step-by-step explanation:

Let [tex]X[/tex] denote whether a product with the extended warranty requires replacement in that two years. ([tex]X\![/tex] would be a random variable.) Assume that [tex]X = 1[/tex] means that the product requires replacement, and [tex]X = 0[/tex] otherwise.

Assume that this product requires replacement in that two years. That is: [tex]X = 1[/tex]. The company would then bear a cost of [tex]200 \times 1 =200[/tex] for replacing this product (since [tex]X = 1\![/tex], that cost would be the same as [tex]200 = 200 \times 1 = 200\, X[/tex].)

On the other hand, assume [tex]X = 0[/tex] (that is: this product does not require replacement in that two years.) The company would not need to pay for replacing this product. Since [tex]X = 0\![/tex], the expression [tex]200\, X[/tex] would still represent the cost for the company for this warranty.  

Either way, [tex]200\, X[/tex] would denote the replacement cost that the company would bear for this product. However, given that the company would charge [tex]\$ 11[/tex] for the extended warranty, the net revenue of the company on this warranty would be [tex]((-200) \, X + 11)[/tex]. (An earning of [tex]\$11 \![/tex] minus a spending of [tex]200\, X \![/tex].)

The question states that [tex]0.5\%[/tex] of the products would need replacement in this period. In other words, the expected value of [tex]X[/tex] would be [tex]\mathbb{E}(X) = 0.005[/tex].

The expected revenue of the company on this warranty would be:

[tex]\mathbb{E}(200\, X + 11)[/tex].

Apply the linearity of expected values to find the value of [tex]\mathbb{E}(200\, X + 11)[/tex]:

[tex]\begin{aligned}& \mathbb{E}((-200)\, X + 11) \\ &= (-200)\, \mathbb{E}(X) + 11 \\ &= (-200) \times 0.005 + 11 = 1\end{aligned}[/tex].

Hence, the company is expected to make [tex]\$ 1[/tex] on every extended warranty that it sold.


Related Questions

if a trader make a loss of 10% when he sells a watch for 15,300
a what is the cost price
b how much would he gain if he made a profit of 6%

Answers

Answer:

A. original price: 16830

B. Profit gain: 918

10%=1530

6%=918

#gamer

What is the square root of -24

Answers

The square root of a negative number does not exist in the set of real numbers so the answer is Undefined


1. Each letter in VALENTINE is written on a separate piece of paper and put into a bag.
You randomly choose a piece of paper from the bag. Find the probability of choosing an
E

Answers

Answer:

2/9

Step-by-step explanation:

two e with a total of 9 letters

HELPPPPP!!!!!!!!!!!!!!

Answers

Answer

0.75 or 3/4 is the answer (degree)

I just solved for the angles and use a graphing calculator to find the din and cosine values and multiply them

0.75 or is the answer for this question

50 PONITS
If you travel 82 km in 40 minutes, what is your speed in km/h?

Answers

Answer:

123 km/h

Step-by-step explanation:

the formula for the unit rate would be 82/40

82 divided by 40 is 2.05km/m

Then you have to convert 2.05 km/m to km/h

multiply 2.05 times 60 and your answer is 123 km/h

Answer: 123 km/h

Step-by-step explanation:

What is the opposite of this integer: 180,000

Answers

Answer:

-180000

Step-by-step explanation:

Given the linear system:

5x + 3y = 17
-8x - 3y = 9

What is the correct formula for the solution to the linear system?

Answers

-3x=26 when you solve using elimination, so then x= -8.6 and plug that in to find y and then see which answer matches

Answer:

Step-by-step explanation:

For this question, it's C

F(x) = 3 + 4x G(x) = 6x + 7

I) find fg(x)

Answers

Answer:

See the attached document

72 paper clips to 63 paper clips

Answers

Answer:

72>63

Step-by-step explanation:

what is the rest of the question like in what form

LIBBY NEEDS TO MAKE 1/2 OF HER CHILLI RECIPE FOR THE SCHOOLS CHILI CONTEST.IF LIBBY USUALLY NEEDS 2 CUPS OF CORN FOR HER CHILI RECIPE,HOW MUCH CORN WILL SHE NEED FOR THE CHILI CONTEST?
A. 1 CUP
B. 1/4 CUP
C. 4 CUPS
D. 2/4 CUP

Answers

Answer:

a

Step-by-step explanation:

because she only need a half of it

Answer:1/4

Step-by-step explanation:

Sam has saved 1400 cents from selling lemonade how many dollars does Sam have

Answers

Answer: $14.

Step-by-step explanation: 100 cents is equal to 1 dollar. 1400 cents divided by 100 cents = 14. Therefore, you have 14 dollars.

find the are area of the square ABCD​

Answers

Answer:

196 m2

Step-by-step explanation:

Answer:

The area of the square ABCD with side of 14m

is 196 m²

Step-by-step explanation:

Area = a*a = 14 x 14 = 196 m²

a is side

Maria has 6 pizza slices and wants to split them among her and 8 other friends. If each person gets the same amount, how much of the pizza slice will each person get?

Answers

Answer:

1 if u cut  all of them in half

Step-by-step explanation:

1 if you cut them in half ok

Can someone help me with this?

Answers

Answer:

ᴀ.)

Step-by-step explanation:

Hope you get it right!! :)

A vendor has 10 balloons for sale: 5 are yellow, 2 are red, and 3 are green. A balloon is selected at random and sold. If the balloon sold is yellow, what is the probability that the next balloon selected at random is also yellow?



Answers

Answer:

4/9

Step-by-step explanation:

Answer:

4/9

Step-by-step explanation:

Can somebody please answer the question giving brainliest!

Answers

Answer:

A counter clockwise

Step-by-step explanation:

The area of one face of a cube is 25 square centimeters. What is the volume, in cubic centimeters, of the cube?​

Answers

Answer:

125 cubic cm

Step-by-step explanation:

Length^2 = 25 so each side length is 5cm

5^3 = 125 cubic cm

please help me with geometry question :)

Answers

Given:

The graph of a triangle ABC.

A line is parallel to AC and passes through the point D.

To find:

The point at which the intersection of this parallel line be with the line BC.

Solution:

From the given figure it is clear that A(1,7), B(9,7), C(9,1) and D(5,7).

Slope of AC is

[tex]Slope=\dfrac{y_2-y_1}{x_2-x_1}[/tex]

[tex]Slope=\dfrac{1-7}{9-1}[/tex]

[tex]Slope=\dfrac{-6}{8}[/tex]

[tex]Slope=\dfrac{-3}{4}[/tex]

Slope of parallel lines are same. So, the slope of parallel line is also [tex]-\dfrac{3}{4}[/tex].

The parallel line passes through D(5,7) with slope [tex]-\dfrac{3}{4}[/tex]. So, the equation of the line is

[tex]y-y_1=m(x-x_1)[/tex]

[tex]y-7=-\dfrac{3}{4}(x-5)[/tex]

[tex]y=-\dfrac{3}{4}(x)+\dfrac{15}{4}+7[/tex]

[tex]y=-\dfrac{3}{4}(x)+\dfrac{28+15}{4}[/tex]

[tex]y=-\dfrac{3}{4}(x)+\dfrac{43}{4}[/tex]              ...(i)

From the given graph it is clear that the line BC is a vertical line. So, the x-coordinates of all the points lie on BC are the same, i.e., 9.

Putting x=9, we get

[tex]y=-\dfrac{3}{4}(9)+\dfrac{43}{4}[/tex]

[tex]y=\dfrac{-27}{4}+\dfrac{43}{4}[/tex]

[tex]y=\dfrac{16}{4}[/tex]

[tex]y=4[/tex]

Therefore, the point at which the intersection of this parallel line be with the line BC is (9,4).

PLEASE HELP FAST
2. Which of the following is the difference of two squares?
49m2 + 81n?
9a? - 466
99
36h
2x2 – 6y?

Answers

Every difference of squares problem can be factored as follows: a2 – b2 = (a + b)(a – b) or (a – b)(a + b). So, all you need to do to factor these types of problems is to determine what numbers squares will produce the desired results.

What is the distance between points (-2, -5) and (-14, 4) on the coordinate plane

•9
•12
•14
•15

Answers

Answer:

15 units

Step-by-step explanation:

[tex]distance formula =\sqrt{(x_{2} -x_{1} )^{2} + (y_2 -y1)^{2} } } \\[/tex]

[tex]x_{1} = -2\\x_{2} = -14\\y_{1} = -5\\y_{2} = 4[/tex]

[tex]distance\\= \sqrt{(-14 - -2)^{2} + (4 - -5)^2 } \\= \sqrt{(-12)^2 + (9)^2} \\= \sqrt{144 + 81} \\= \sqrt{225} \\= 15\\Thus distance between the two points (-2,-5) and (-14,4) = 15 units[/tex]

Hope it helps....

Solve for x 4(2x+3)
I’ll mark brainlyest

Answers

Answer:

=2x5+3x4 plus brainliest please

Step-by-step explanation:

=(x4)(2x+3)

=(x4)(2x)+(x4)(3)

=2x5+3x4

Answer:

You cant solve it because its an expression but below is the expression simplified if you put the equal thing I will edit it to make it correct

Step-by-step explanation:

4 x 2x = 8x

4 x 3 = 12

8x + 12

I need help on this?

Answers

Answer:

it’s 65

Explanation:

because I went within

Jack and his two friends each ordered a small pizza, Jack ate 7/8 of his pizza, Luis ate 3/4 of his pizza, Tyrone ate 1/2 of his pizza. How much pizza was left. Answer to the simplest form.

Answers

8/8 - 7/8 = 1/8
4/4 - 3/4 = 1/4
2/2 - 1/2 = 1/2

1/4 * 2/2 = 2/8
1/2 * 4/4 = 4/8

1/8 + 2/8 + 4/8 = 7/8 of a pizza was left

Answer:

1/8

Step-by-step explanation:

What we wanna do first is make all denominators the same. Multiply 3/4 by 2/2 and 1/2 by 4/4. This will get you 6/8 and 4/8. Now we have all the fractions:

6/8. 4/8, 7/8

We know Jack ate 7/8 of his pizza, so there's 1/8 pizza left for him.

Luis ate 3/4, which became 6/8, so there's 2/8 of pizza left.

Tyrone ate 1/2 of his pizza, which is 4/8, so there is 4/8 left.

Add: 1/8 + 2/8 + 4/8 = 7/8

This means that there is 1/8 slice left because 7/8 of the whole pizza was eaten.

Find the area of the figure.

(Simplify Your Answer)

Answers

Answer:

7550 meter square

area of rectangle = Length x breadth

= 130 x 20

= 2600 meter square

area of triangle = 1/2 x base x height

1/2 x (130-20)m x (130-40)m

1/2 x 110m x 90m

55 x 90

4950 metre square

area of rectangle + area of triangle

4950 + 2600

7550 meter square

Simpify the expression.
5+4z-2z

Simpilfied expression ​

Answers

Answer:

2z + 5

Step-by-step explanation:

you have to combine like terms

subtract 4z - 2z and you get 2z

the number with the variable next to it goes first not the constant

2z + 5

the variable is z and the constant is 5 because it doesn't have variable next to it

hope this makes sense and helps :)

tell me if you have any questions

Step-by-step explanation:

Here as the like terms only are 4z and -2z so,

We simplify the like terms:

5 + 4z - 2z. [B.O.D.M.A.S rule] (subtraction only)

= 5 + 2z (Ans)

At a party, the amount of people who ate chicken wings was 9 less than 3 of the total
number of people. The number of people who ate chicken wings was 2. Write and solve an equation
to find the number of people at the party. Let x represent the number of people at the party. Use pencil
and paper. Write a one-step equation that has the same solution.

Answers

Answer:

3-9= the number of people who at chicken wings and the number of people who ate chicken wings were 2. By the way i dont know if did my math absolutley correct. sry:(

items? How many of each
ina
3.Reina has 40 pieces of bananas, 48 pieces of atis and 36 pieces of chicos. She
wants to put them equally in the plastic bag. How many possible number of
each fruit will be placed in the plastic bag?​

Answers

Answer:

36

Step-by-step explanation:

If I understood your question right, it means that Reina wants to put equal amounts of fruits into the bag. Also it suggests that the volume of the bag is not limited.

Since 36 < 40 < 48, the largest amount of each kind of fruits in the bag can be 36. Otherwise Reina wouldn't be able to put more chinos and the amount of each fruit in the bag wouldn't be equal.

Assuming that the smallest amount of fruits in the bag is one (the bag is not empty), there are 36 possible numbers (from 1 to 36) of each fruit.

Riley planed 4 rows of pumpkins. There were 1,205 plants in each row. How many pumpkins plants did Riley plant?

Can anyone help me thank you

Answers

Riley planted 4,820 pumpkins

Can removing two outliers not have an effect on the mean? Justify your responses.

Answers

It will have an effect on the mean, especially since they are outliers and are very different from the norm, they greatly affect the average; unless both of the outliers have an equal distance from the mean, they will affect the mean.

What is the factored form of this expression?
216p6 + 1
(3p – 1) (3p + 1) (6p2 – p2 + 1)
(3p – 1) (3p + 1) (36p4 + 6p2 + 1)
(6p2 + 1)(36p4 - 6p2 + 1)
o 6p2 – 1) (36p4 + 6p2 + 1)

Answers

The correct answer would be
(6p2+1)(36p4+6p2+1)
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