When might a limited warranty be a better choice than a full warranty?
A limited warranty can be more economical than a full warranty. If the conditions excluded by the limited warranty are either not very expensive or are exceedingly unlikely to ever arise, but you still want to have some protection for your purchase, a limited warranty can be a better deal.
A combination washer/dryer costs $1,179. New parts for this washer/dryer cost $211, labor to repair it costs $553, and shipping it to and from a repair center costs $152. A full warranty, which covers all aspects of repairing the washer/dryer, costs 30% of the price of the washer/dryer. A limited warranty, which only covers labor costs, only costs 14% of the price of the washer/dryer. Assuming that the washer/dryer needs repairs which include parts, labor, and shipping, which warranty is the better deal, and by how much, rounded to the nearest dollar?
If an item tends to be very expensive to repair, how might that affect your decision to purchase a warranty for it?
An electric guitar costs $830, with a $225 full-replacement warranty. If the manufacturer sells 532,475 warranties and has to honor 12% of them, how much profit did the manufacturer gain from the warranties?
What kind of warranty is often offered not through the manufacturer but instead through a third party?
Of the following, which factor or factors would make it more likely that buying an extended warranty is a good idea?I. The extended warranty overlaps with the manufacturer’s warranty.II. The product has a high probability of needing repair in the next few years.III. The product is a major purchase that you are unlikely to soon replace.
What is the difference between a full warranty and a limited warranty?
The extended warranty on a $960 dishwasher is 21% of the purchase price and lasts for eight years. What is the effective cost per year of the extended warranty?
Say you are buying a bicycle. You do not plan to use the bicycle for more than a few years before buying a new one, but will rely on it in the meantime. You know that your bicicyles tend to need repairs periodically, but you tend to take good care of them overall. The bicycle is relatively cheap, so you do not want to invest too much money into it. What kind of warranty would be a good one to purchase and why?
An electric guitar costs $830, with a $225 full-replacement warranty. If the manufacturer sells 532,475 warranties and has to honor 12% of them, how much profit did the manufacturer gain from the warranties?
The extended warranty on a ceiling fan is 18% of the purchase price. If the price of the fan is $140, how much is the warranty?
A combination washer/dryer costs $1,179. New parts for this washer/dryer cost $211, labor to repair it costs $553, and shipping it to and from a repair center costs $152. A full warranty, which covers all aspects of repairing the washer/dryer, costs 30% of the price of the washer/dryer. A limited warranty, which only covers labor costs, only costs 14% of the price of the washer/dryer. Assuming that the washer/dryer needs repairs which include parts, labor, and shipping, which warranty is the better deal, and by how much, rounded to the nearest dollar?
Say you have a warranty on your laptop computer. Which of these situations is most likely to be covered by that warranty?
Of the following, which factor or factors would make it more likely that buying an extended warranty is a good idea?I. The extended warranty overlaps with the manufacturer’s warranty.II. The product has a high probability of needing repair in the next few years.III. The product is a major purchase that you are unlikely to soon replace.
Say you have a warranty on your laptop computer. Which of these situations is most likely to be covered by that warranty?
The manufacturing cost of an air-condioning unit is $544, and the full-replacement extended warranty costs $113. If the manufacturer sells 506,970 units with extended warranties and must replace 20% of them as a result, how much will the replacement costs be? (Note: Assume manufacturing costs and replacement costs are the same.)
What does it mean for a manufacturer’s warranty and an extended warranty to overlap?
If an item tends to be very expensive to repair, how might that affect your decision to purchase a warranty for it?
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