Is it ever a good idea to buy an extended product warranty? In this lesson students use percents to explore the expected value
of AppleCare, i.e. how much is AppleCare actually worth
, and how much does it cost?
This expected value depends on two factors: the probability that the device will break and the cost to replace it. The higher the probability that a product will fail, and the more expensive it is, the more valuable a warranty will be. So what does the probability of breaking have to be to justify purchasing AppleCare…and are warranties ever a good idea?