Question: For Problem, what length of period of the warranty equates the replacement costs of the calculator with and without the warranty?
Problem: A producer of pocket calculators estimates that the calculators fail at a rate of one every five years. The calculators are sold for $25 each with a one-year free replacement warranty but can be purchased from an unregistered mail-order source for $18.50 without the warranty. Is it worth purchasing the calculator with the warranty?