# Expected value question from a "Survey of Math" course

• Dec 1st 2012, 06:59 PM
bobries1959
Expected value question from a "Survey of Math" course
Hi,

I hope this post is in the right place!!

I have the following question and am trying to understand it properly. Please advise and thanks to all for your assistance.

A store that sells and repairs televisions sells maintenance agreements for $13 a year. The average cost for repairing a television is$55 and 7 in every 100 people who purchase maintenance agreements have televisions

that need repair. Find the expected profit per maintenance agreement.

Bob
• Dec 2nd 2012, 01:33 PM
Soroban
Re: Expected value question from a "Survey of Math" course
Hello, bobries1959!

Be careful!
This is not your average Expected Value problem.

Quote:

A store that sells and repairs televisions sells maintenance agreements for $13 a year. The average cost for repairing a television is$55.
7 in every 100 people who purchase maintenance agreements have televisions that need repair.
Find the expected profit per maintenance agreement.

The store receives $13 for every agreement. It costs the store$55 for 7% of the agreements.

The expected profit is:
. . $\displaystyle (100\%)(\$13) + (7\%)(\text{-}\$55) \:=\:\$9.15\text{ per agreement.}\$
• Dec 3rd 2012, 09:07 AM
bobries1959
Re: Expected value question from a "Survey of Math" course
Soroban,

Thank you so much for the help!! I could not understand the process there. Thank you again for your assistance!

Bob