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

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:

. . $\displaystyle (100\%)(\$13) + (7\%)(\text{-}\$55) \:=\:\$9.15\text{ per agreement.}$

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