ACCR is so confident in its workmanship that it offers a 10-year bumper-tobumper warranty with all car sales. The warranty covers all defects and breakdowns that are not directly related to regular wear and tear. John is unsure of how much the warranty will cost to service, but is confident that his vehicles will stand the test of time. Based on his experience, John estimates the probability of a vehicle making a warranty claim during the 10 years of coverage are as follows: Year 1 2 3 4 5 6 7 8 9 10 1% 2% 2% 5% 5% 10% 12% 15% 18% 20%

The average retail value per claim is $1,250. The average cost of parts and service at ACCR is about 60% of that of a dealership

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