Question
An LG Dishwasher, which costs $800, has a 20% chance of needing to be replaced in the first 2 years of purchase.A two-year extended warranty
An LG Dishwasher, which costs $800, has a 20% chance of needing to be replaced in the first 2 years of purchase.A two-year extended warranty costs $112.10 on a dishwasher.What is the expected value of the extended warranty assuming it is replaced in the first 2 years?
could some one please provide me with either a formula and explanation or a step-by-step explanation to this problem?
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An Introduction to the Mathematics of financial Derivatives
Authors: Salih N. Neftci
2nd Edition
978-0125153928, 9780080478647, 125153929, 978-0123846822
