Problem 39 of 7
Include fixed cost in expected value for an extended warranty costs $250. The probability of needing a $1000 repair is 0.2.
Using a hint is okay. It just tells the trainer to give you a little more review.
Hidden until you reveal it.
subtract entry fee, premium, or fixed cost.
Hidden until you reveal it.
Subtract entry fee, premium, or fixed cost in lottery, warranty, and game contexts.
Enter your answer
Your answer is equivalent to the expected form.
Walkthrough
Full solution stays hidden until you ask for it.
1. Compute expected payout from outcomes and probabilities.
2. Subtract the fixed cost or premium.
3. Interpret positive or negative net expected value.
Use the worked steps, then substitute the final answer back into the original relationship to confirm it satisfies the prompt.
Reporting gross expected payout as net expected value.