We will have the following:
We know that there is a 7% chance that they would need to pay the car; that means that for each 100 people that pay the warranty 7 would need to be paid for it; so the total amount obtained from 100 people would be:
[tex]T=100(983)-7(13400)\Rightarrow T=4500[/tex]
Now, from this we can determine the total amount of money gained from each warranty sold by dividing by the total of the hypothetical sales; in our case 100, that would be:
[tex]x=\frac{4500}{100}\Rightarrow x=45[/tex]
So:
MotoWin can expect to make money from offering these warranties.
In the long run, they should expect to make 45 dollars on each warranty sold.
