Thread: 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

Hello, bobries1959!

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

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:
. .

Soroban,

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

Bob