A small business just leased a new computer and color laser

A small business just leased a new computer and color laser printer for three years for the computer offers unlimited repairs for a fee of $100 a year plus a $25 service charge for The company\'s research indicates that during a given year 50% of these be repaired once, 10% twice. 10% three times, and none required more than three repairs. Find the expected number of repairs for this kind of computer per year. What is the company\'s mean annual expense with the service contract for the

Solution

a)

expected number = 0.50 * 1 + 0.10 * 2 * 0.10 * 3 = 1

b)

mean annual expenses = 100 * 0.50 + 25 * 0.10 + 0.10 * 25 = 55