After buying a computer system, Ben Cheng must decide whether to purchase (1) a complete maintenance (or service) policy at a cost of P500, which would cover all maintenance costs (2) a partial maintenance policy at a cost of P300, which would cover some of the costs of maintenance or (3) no maintenance policy The consequences, costs, and probabilities are given in the following table MAINTENANCE REQUIRED NOT REQUIRED No Service Agreement 3,000 0 Partial Service Agreement 1,500 300 Complete Service Agreement 500 500 Probabilities 0 2 0 8 Answer the following questions (a) What do you recommend (b) If the probability of needing maintenance is 0 8 (instead of 0 2) and the probability of not needing maintenance is 0 2, how does this change Ben's decision

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Question: After buying a computer system, Ben Cheng must decide whether to purchase (1) a complete maintenance (or service) policy at a cost of P500, which

After buying a computer system, Ben Cheng must decide whether to purchase (1) a complete maintenance (or service) policy at a cost of P500, which would cover all maintenance costs; (2) a partial maintenance policy at a cost of P300, which would cover some of the costs of maintenance; or (3) no maintenance policy. The consequences, costs, and probabilities are given in the following table:

	MAINTENANCE REQUIRED	NOT REQUIRED
No Service Agreement	3,000	0
Partial Service Agreement	1,500	300
Complete Service Agreement	500	500
Probabilities	0.2	0.8

Answer the following questions:

(a) What do you recommend?

(b) If the probability of needing maintenance is 0.8 (instead of 0.2) and the probability of not needing maintenance is 0.2, how does this change Ben's decision?

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