A small business just leased a new presentation equipment and a 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 indicates that during a given year 86% of these computers need no repairs, 9% need to be repaired once, 4% twice, 1% three times, and none required more than three repairs.
Find the expected number of repairs for this kind of computer per year.
A)0.20 repairs.
B)0.55 repairs.
C)0.89 repairs.
D)1.00 repairs.
E)1.20 repairs.

Question

Quizplus · Accepted Answer

The expected number of repairs is 0.20 repairs per year. This is calculated by multiplying the probability of each number of repairs by the number of repairs and then adding the results. So, (0.86 * 0) + (0.09 * 1) + (0.04 * 2) + (0.01 * 3) = 0.20.

A Small Business Just Leased a New Presentation Equipment and a Color