Pretend you want to buy a computer. The computer comes with a 1 year warranty. You can buy a warranty for an additional year for 24.95. You have determined that in the second year of owning your laptop, there is a 1 in 2 chance of incurring a major repair that will cost around around 180 and a probability of 0.15 of a minor report that would cost around 65.

Is it worth purchasing another year? And if the cost of the additional warranty is too high, what would be a fair price to charge the additional warranty?