How did they do the following calculation?
Likelihood of failure within the first five years is 22%; expected replacement cost per car sold is € 1,100 which is also the minimum price to be charged to the customer for the replacement warranty.
Thank you
Well, Table 1 gives the combined chance of battery failure of 22% in the first 5 years (sum of annual %-ages). The interviewer provides the battery replacement cost of 5k. 22% of 5k is 1.1k.
Hello, it´s just leveraging the data that is stated in the case, table 1.
