Answered step by step
Verified Expert Solution
Question
1 Approved Answer
#22. (8 points) A customer buys a $499 smart phone online. The online retailer offers a 1-year phone replacement warranty for the purchase for $20.40
#22. (8 points) A customer buys a $499 smart phone online. The online retailer offers a 1-year phone replacement warranty for the purchase for $20.40 and based on the past records, estimates that there a 2.5% chance that the warranty will be used to replace a broken phone. Calculate the expected value of the retailers profit on each one of these warranties sold. Use two decimal place accuracy.
A customer buys a $499 smart phone online. The online retailer offers a 1-year phone replacement warranty for the purchase for $20.40 and based on the past records, estimates that there a 2.5% chance that the warranty will be used to replace a broken phone.
Calculate the expected value of the retailers profit on each one of these warranties sold.
Use two decimal place accuracy.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started