Four years ago, Victor purchased a very reliable automobile (as rated by a reputable consumer advocacy publication). His warranty has just expired, but the manufacturer has just offered him a 5-year, bumper-to-bumper warranty extension. The warranty costs $4,500. Victor constructs the following probability distribution with respect to anticipated costs if he chooses not to purchase the extended warranty. Cost (in $) Probability1100 .202700 .385400 .239500 .19a.Calculate Victor’s expected cost.b.Given your answer in part (a), should Victor purchase the extended warranty? (Assume risk neutrality.) Yes or No
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