Suppose Your Firm Is Buying Five New Computers

question 45

Short Answer

Suppose your firm is buying five new computers. The manufacturer offers a warranty to replace any computer that breaks down within three years. Suppose there is a 25% chance that any given computer breaks down within three years.
A) What is the probability that exactly one of the computers breaks down within five years?
B) What is the probability that at least one of the computers breaks down within five years?
C) Suppose the warranty for five computers costs $700, while a new computer costs $600. Is the warranty less expensive than the expected cost of replacing the broken computers?

• A) What is the probability that exactly one of the computers breaks down within five years?
• B) What is the probability that at least one of the computers breaks down within five years?
• C) Suppose the warranty for five computers costs $700, while a new computer costs $600. Is the warranty less expensive than the expected cost of replacing the broken computers?

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Definitions:

Cultural Elements

Components that define the traditions, values, norms, and practices of a culture, shaping its identity and influencing behavioral patterns.

Perception

The process by which individuals interpret and organize sensory information to give meaning to their environment.

Psychological Process

The mental mechanisms and operations that underlie an individual's cognitive functions and behavior.

Reactive Devaluation

The tendency to view a proposal or offer as less desirable simply because it originated from an adversary or opposing party.