Scenario: an Air-Conditioner Manufacturing Company Offers a Warranty of 3

Scenario: An air-conditioner manufacturing company offers a warranty of 3 years on a new air conditioner at a cost of $150. The air conditioner costs $1,500 and has a 15/100 or 15 percent probability of a breakdown each year. A new air conditioner will cost $1,000, $650, and $350, respectively, in the following 3 years. The interest rate on your credit card is 12 percent.
-Refer to the scenario above.A change in the probability of breakdown to 10 percent will ________.

A) increase the net present value to $135.65.
B) lead to a negative net present value.
C) decrease the net present value to $16.02.
D) decrease the net present value to $10.