Example 24.5: Imagine you wanted to avoid having to pay for car repairs before your car is paid off, so you are considering purchasing a new Toyota Corolla. What is the maximum percentage of Corollas that will require a major repair before you pay off the five year car loan? To answer this, assume the following: You will put 20,000 miles on the car per year for each of the first five years you drive it. This means, the car will reach 100,000 miles by the time you pay it off. Also, assume the average mileage for Toyotas undergoing their first major repair is 150,000 with a standard deviation of 10,416 miles.

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Example 24.5

Sample Exams