Denon is buying a clothes dryer that costs $825.
The clothes dryer has a 1 yr warranty from the manufacturer.
The store sells a 5 yr extended warranty for $110. (This is gain amount.)
The odds against needing repairs over the 5 yr are 3:17
a) What is the probability that the clothes dryer will need repairs during the extended- warranty period? (This is probability of loss.) Express using the method of your choice
To calculate the probability that the clothes dryer will need repairs during the extended warranty period, we first need to determine the probability of not needing repairs over the 5-year period.
The odds against needing repairs are given as 3:17. This means that out of every 20 dryers sold, 3 will need repairs and 17 will not.
Therefore, the probability of not needing repairs is 17/20 = 0.85.
Now, to find the probability of needing repairs, we subtract the probability of not needing repairs from 1:
P(repair) = 1 - P(no repair)
P(repair) = 1 - 0.85
P(repair) = 0.15
So, the probability that the clothes dryer will need repairs during the extended warranty period is 0.15 or 15%.