Your company produces bicycles and is about to start production and sales of a new model.

Independent lab tests show that there is a 1% chance, over the course of this bike's life, that the brakes will fail.

Your legal team estimates that it will cost your company, on average, $1,000 to settle each incident of brake failure.

However, if at least 250 bikes suffer brake failures, plaintiffs' lawyers will be able to file a class-action lawsuit.

Your legal team estimates that a class-action lawsuit will result in your company being ordered to retrofit the bikes

you've sold with new brakes at a cost of $100 for each bike.

Not counting retrofit and settlement costs, your company will make an average profit of $75 per bicycle.

Suppose your company sold 20,000 bikes. Calculate each of the following:

E(# of brake failures)

E(cost of settlements)