The Eyes Have It sells custom eyewear during Year Onethat come with an embedded warranty. If the…

 
   

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The Eyes Have It sells custom eyewear during Year Onethat come with an embedded warranty. If the glasses break duringYear Two, they will be fixed for free. Customers may also purchasean extended warranty that covers Year Three. During Year One, thecompany sold 55,000 pairs of eyeglasses for $1,000,000. Customerswho purchased 40,000 of those pairs also purchased the Year Threeextended warranty. The extended warranty brought in additional cashof $200,000. The company expects that 6 percent of the glasses willbreak during Year Two, and another 8 percent will break during YearThree. Each repair will cost $20 to fix.