Question

In: Statistics and Probability

The probability that a customer will buy a new car and an extended warranty is 0.16. If the probability that a customer..

The probability that a customer will buy a new car and an extended warranty is 0.16. If the probability that a customer will purchase a new car is 0.30, find the probability that the customer will also purchase the extended warranty

Solutions

Expert Solution

Let:

  • C indicate when a customer buys a car
  • W indicate when a customer buys an extended warranty with their purchase of a car

 

We have:

P(C∩W) = 0.16

      P(C) = 0.30

 

The probability that the customer will also purchase the extended warranty (It implies the customer has purchased the car already):

P(W|C) = P(C∩W)/P(C) 

              = 0.16/0.30 

              ≈ 0.5333

 

Therefore, the probability that the customer will purchase an extended warranty with the purchase of a car is approximately 0.5333.

Therefore, the probability that the customer will purchase an extended warranty with the purchase of a car is approximately 0.5333.

Nabeel answered 1 year ago
Next > < Previous

Related Solutions

You bought a new car and decided to buy an extended warranty a day later. The...
You bought a new car and decided to buy an extended warranty a day later. The dealer offers you two alternative payment plans. The first plan requires a $2,000 immediate up-front payment. The second plan requires you to make monthly payments of $100.00, payable at the end of each month for 2 years. What nominal annual interest rate is built into the monthly payment plan? 17.16% 19.86% 15.41% 18.16% Cannot be determined
Which of the following is an example of an extended warranty?
Which of the following is an example of an extended warranty? Multiple Choice Erickson Electronics promises to make repairs or replace any product found to be defective within a week of purchase. Fancy Headphones, Inc. provides assurance that its headphones are defect-free after purchase. Mark Electronics offers a warranty at an affordable price that provides additional protection after the customer takes possession of the product. Azalea's Flowers assures clients that its flowers will stay fresh for at least a week....
It is time to buy a new car. You worked hard and want to buy an...
It is time to buy a new car. You worked hard and want to buy an expensive car (Porsche Cayenne) for $100,000. Porsche dealership will gladly finance your new purchase. However, the only way for you to be financed is to show them that you have 20% of the money needed. As soon as you have that much money in your account, the dealership will finance your new vehicle. You start saving for 52 months with the APR of 7.5%,...
You are negotiating to buy a new car with a car salesman at a local dealer....
You are negotiating to buy a new car with a car salesman at a local dealer. You have negotiated the price to $35,000. You have $5,000 to put towards the down payment and plan to get a loan for the rest. If you can get an annual interest rate of 11 percent APR (with monthly compounding) over a 5-year period, what would be your monthly payment? Round it to two decimal place (cents), e.g., 234.56.
You are planning to buy a new car. The cost of the car is $50,000. You...
You are planning to buy a new car. The cost of the car is $50,000. You have been offered two payment plans: • A 10 percent discount on the sales price of the car, followed by 60 monthly payments financed at 9 percent per year. • No discount on the sales price of the car, followed by 60 monthly payments financed at 2 percent per year. If you believe your annual cost of capital is 9 percent, which payment plan...
You are negotiating to buy a new car with a car salesman at a local dealer....
You are negotiating to buy a new car with a car salesman at a local dealer. You have negotiated the price to $31,000. You have $3,000 to put towards the down payment and plan to get a loan for the rest. If you can get an annual interest rate of 5 percent APR (with monthly compounding) over a 5-year period, what would be your monthly payment? Round it to two decimal place (cents)
A new car battery is sold with a two-year warranty whereby the owner gets the battery...
A new car battery is sold with a two-year warranty whereby the owner gets the battery replaced free of cost if it breaks down during the warranty period. Suppose an auto store makes a net profit of $20 on batteries that stay trouble-free during the warranty period; it makes a net loss of $10 on batteries that break down. The life of batteries is known to be normally distributed with a mean and a standard deviation of 40 and 10...
The sales associates at TV World earn a commission on every extended warranty that they sell...
The sales associates at TV World earn a commission on every extended warranty that they sell to customers who buy a TV, so they have an incentive to aggressively promote that warranty. Suppose that TV World sells an extended warranty to 12% of the customers who buy a TV. We are planning to randomly select 135 customers who have bought a TV from TV World in the last year. What is the sampling distribution of the sample proportion of the...
4) An extended warranty for 3 years is sold for $1,155.00 on January 1, 2009. $200...
4) An extended warranty for 3 years is sold for $1,155.00 on January 1, 2009. $200 is spent by the company to honor the warranty on March 7, 2009. Revenue is recognized for unused portion of the warranty on December 31, 2009. No money is spent in 2010 on warranties. Revenue is recognized for the unused portion of the warranty on December 31, 2010. (check figure: 12/31/2009 entry to unearned extended warranty = $185.00 debit) Create the general journal entries...
A cell phone company offers a simple extended warranty plan. If your phone is damaged, they...
A cell phone company offers a simple extended warranty plan. If your phone is damaged, they will repair it for up to $50. If you lose or destroy your phone, they will give you a $200 voucher towards a new phone. The company believes that 5% of customers will need the replacement voucher and 10% will request a repair. 1. If the company charges $25 for this extended warranty, what is the expected value of the profit they will earn?...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT