Expected Value extended warranty

A company estimates that 0.2% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $450.

If they offer a 2 year extended warranty for $55, what is the company's expected value of each warranty sold?

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  1. ev=55-.002*450=55-.90 check my math

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    bobpursley
  2. IT'S 54.1

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