At the Time of Purchase of Its Product,a Company Offers

question 15

Short Answer

At the time of purchase of its product,a company offers a contract to its customers that guarantees the replacement of the product if it malfunctions within a one-year period.The cost of the contract is $10.The probability that a unit of the product malfunctions within one year of purchase is 0.06.If the cost to the company for replacement of a unit is $160,determine the company's expected gain or loss per contract.