Rent-to-own (RTO) stores allow consumers immediate access to merchandise in exchange for a series of weekly or

Question:

Rent-to-own (RTO) stores allow consumers immediate access to merchandise in exchange for a series of weekly or monthly payments. The agreement is for a fixed time period. At the same time, the customer has the flexibility to terminate the contract by returning the merchandise. Suppose the RTO store makes a $200 profit on appliances when the customer ends up owning the merchandise by making all payments. It makes a $20 profit when the customer returns the product and a loss of $600 when the customer defaults. Let the return and default probabilities be 0.60 and 0.05, respectively.
a. Construct a probability for the profit per appliance.
b. What is the expected profit for a store that sells 200 rent-to-own contracts?

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...