A service that repairs televisions sells maintinance agreement for $9 a year the average cost for repairing a television is $39 and 3 in every 100 people who purchased maintenance agreements have television that require repairs Find the services expected profit per maintenance agreement

A service that repairs T.V sells maintenance agreement for $9 a year the average cost for repairing a T.V. is $39 and 3 in every 100 people who purchased maintenance agreements have T.V. that require repairs. Find the services expected profit per maintenance agreement

To find the service's expected profit per maintenance agreement, we need to calculate the revenue and expenses associated with the maintenance agreement.

1. Revenue:
The service charges $9 per year for the maintenance agreement.

2. Expenses:
a) Cost of repairing a television:
The average cost of repairing a television is given as $39. This is an expense that the service incurs when a customer requires a repair.

b) Number of maintenance agreement holders who require repairs:
It is stated that 3 in every 100 people who purchased maintenance agreements have televisions that require repairs. So, for every 100 maintenance agreements sold, 3 repairs are expected.

Now let's calculate the expected profit per maintenance agreement:

Step 1: Calculate the revenue:
Revenue per maintenance agreement = $9

Step 2: Calculate the expenses:
a) Average cost of repairing a television = $39
b) Number of expected repairs per 100 maintenance agreements sold = 3

Total expenses per maintenance agreement = Cost per repair x Number of expected repairs per maintenance agreement
Total expenses per maintenance agreement = $39 x (3/100)
Total expenses per maintenance agreement = $1.17

Step 3: Calculate the expected profit per maintenance agreement:
Expected profit per maintenance agreement = Revenue per maintenance agreement - Total expenses per maintenance agreement
Expected profit per maintenance agreement = $9 - $1.17
Expected profit per maintenance agreement = $7.83

Therefore, the service's expected profit per maintenance agreement is $7.83.