Given the following data, find the expected breakdown cost. The cost per breakdown is $100
Number of breakdowns 0 1 2 3
Monthly frequency 5 20 23 2
Number of breakdowns 0 1 2 3 Total
Monthly probability .10 .40 .46 .04 1.000
Expected number of breakdowns per month = (0 )(.10 ) + (1 )(.40 ) + (2 )(.46 ) + (3 )(.04 ) = 1.44 Expected cost of breakdowns = (1.44 )($100 ) = $144
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