A company is offering a 2-year extended warranty on a projector. Their research indicates that, on average, about 1 out of 300 of these projectors will fail in the 2 years following the initial manufacturer's warranty. If the projector does fail, they estimate that the repair/replacement cost will average $350.
If the store charges $15 for the extended warranty, what will their expected profit per warranty be?
If the company sells 100,000 projectors and 15% of the customers purchase the extended warranty, what will their expected profits from extended warranty sales be?