A Cell Phone Company Offers a Simple Extended Warranty Plan

Essay

A cell phone company offers a simple extended warranty plan. If your phone is damaged, they will repair it for up to $50. If
you lose or destroy your phone, they will give you a $200 voucher towards a new phone. The company believes that 5% of
customers will need the replacement voucher and 10% will request a repair.
-What do your answers to the previous question tell you about the company's likelihood of
making a profit?