A small business just leased a new computer and color laser printer for three years. The service contract for the computer offers unlimited repairs for a fee of $100 a year plus a $25 service charge for each repair needed. The company’s research suggested that during a given year 86% of these computers needed no repairs, 9% needed to be repaired once, 4% twice, 1% three times, and none required more than three repairs.
a)The service contract for the printer estimates a mean annual cost of $120 with standard deviation of $30. What is the expected value and standard deviation of the total cost for the service contracts on computer and printer? On what assumption does your calculation rest?
Would I just find the mean cost and standard deviation for the computer and just add the two. So for computer Mean = 105 Dev= 13.675 so add (120+105) + (13.675+30)? thus equals = 268.675 for total cost?