Neco Model Questions Vol1 2022 Commerce Question 7
Practice objective / multiple choice question 7 from the 2022 Neco Model Questions Vol1 Commerce examination.
A consumer bought a television for \(200{,}000\) naira with a 2‑year warranty. After 18 months the TV failed. The seller offers two options: (i) keep the TV and pay \(15{,}000\) naira for any future repair after the warranty expires; (ii) replace it now with a newer model that costs 20% more than the original price and carries a 3‑year warranty. The probability that a TV fails in any year is 5% for the original model and 2% for the newer model. Assuming the consumer wants to minimise the expected total cost over the next 3 years from the date of purchase, which option should he choose?
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About This Question
This is Neco Model Questions Vol1 2022 Commerce Question 7. It is one of the objective questions from the 2022 Neco Model Questions Vol1 Commerce examination.
Difficulty level: Hard .
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