Hopewell sells a line of goods under a six-month warranty. Any defect arising during that period is repaired

free of charge. Hopewell has calculated that if all the goods sold in the last six months of the year required

repairs that cost would be $2 million. If all of these goods had more serious faults and had to be replaced

the cost would be $6 million.

The normal pattern is that 80% of goods sold will be fault-free, 15% will require repairs and 5% will have to

be replaced.

What is the amount of the provision required?

$