The Probability that equipment used in a hospital lab will need recalibration is given in the following table. A service firm is willing to perform maintenance and do any necessary calibrations for fee of $650 per month. Recalibration cost $500 per time. Which approach would be most cost-effective, recalibration as needed or the service contract?

number of recalibrations

0, 1, 2 , 3 , 4

probability of occurence

.10, .30, .30, .20, .10