Neco Model Questions Vol1 2025 Commerce Question 42
Practice objective / multiple choice question 42 from the 2025 Neco Model Questions Vol1 Commerce examination.
A consumer buys a washing machine priced at \(\text{₦}120,000\). The seller offers an extended 3‑year warranty that costs 5 % of the purchase price and covers both parts and labour. Without any warranty, the consumer expects an annual repair cost of \(\text{₦}12,000\) for parts (probability 30 % each year) and \(\text{₦}8,000\) for labour (probability 20 % each year), independent of each other. The original 2‑year warranty covers only parts. Over a 3‑year period, does buying the extended warranty lower the expected total cost, and if so, by how much (to the nearest naira)?
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About This Question
This is Neco Model Questions Vol1 2025 Commerce Question 42. It is one of the objective questions from the 2025 Neco Model Questions Vol1 Commerce examination.
Difficulty level: Hard .
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