Mathematics, 17.02.2021 14:10 gloria457

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: 1

Show answers

Answers

Answer from: Lovebamagirl12

The company is expected to make $\$ 1$ on every extended warranty sold.

Step-by-step explanation:

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

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

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

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

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

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

$\mathbb{E}(200\, X + 11)$ .

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

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

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

Answer from: Quest

the median here is 25. your lowest value is 14 and highest value is 48. to find the third quartile, find the medium number in between 25 and 48 which would be 42 i believe.

Answer from: Quest

see attached

step-by-step explanation:

given the function as;

$f(x)=2x^3-7x^2+2x+3$

write the equation replacing f(x) with y

$y=2x^3-7x^2+2x+3$

form and fill a table containing values of y with corresponding values of x

you can take a range for values of x as -3≤x≤3

solving for x=-3

$f(-3)=2*-3^3-7*-3^2+2*-3+3=2*-27-63+-6+3=-54-63-6+3y=-120$

for x=-2

$f(-2)=2*-2^3-7*-2^2+2*-2+3=2*-8-28+-4+3=-16-28-4+3=-45$

repeat the same procedure to get the values of y for the remaining ,x=-1 to x=3

plot the values of y against values of x and obtain the following graph

Another question on Mathematics

Mathematics, 21.06.2019 15:30

Come up with a new linear function that has a slope that falls in the range 10 m − < < . choose two different initial values. for this new linear function, what happens to the function’s values after many iterations? are the function’s values getting close to a particular number in each case?

Answers: 1

Answer

Mathematics, 21.06.2019 23:40

What is the equation, in point-slope form, of the line that has a slope of 6 and passes through the point (–1, –8)? a. y+8 = 6 (x+1 )

Answers: 1

Answer

Mathematics, 22.06.2019 04:20

What are the coordinates of a vertex of the hyperbola?

Answers: 3

Answer

Mathematics, 22.06.2019 04:20

In the diagram below de and ed are tangent to 0 which expression gives the measure of def