I have been attempting to solve this problem on my own but I cannot figure out the correct way to work it. Here the problem:
Suppose a company did $2,000,000 in annual maintenance in 2013 and expects 80% of those to renew for 2014. Suppose that product sales for 2013 were 2,000,000(which include free maintenance in 2013) and 75% of those were expected to pay an annual maintenance of 10% of the purchase price in 2014. What will be the annual maintenance collected in 2014?
Here is how I am working it:
Annual maintenance 2013=2,000,000
Renew 80% of $2,000,000 in 2014= 1,6000,000 maintenance
75% of 2,000,000 in product sales expected to pay an annual maintenance of 10% of the product price in 2014= 1,500,000
1,5000,000 x 0.10(annual maintenance)= 150,000
1,600,000 maintenace + 150,000 maintenance= 1,750,000 maintenance in 2014
My answer is 1,750,000.
I feel my answer is not right and I am working it incorrectly. Can someone review it, to see if I am missing something? Thanks in advance.
Quick question: what is annual maintenance?
I could be wrong but I think it may be the yearly maintenance cost to do maintenance on a product or upgrades on a certain piece of software or hardware?
ok. I feel that your answer is right... Like I think it has a 50% of being right. I have never done these types of problems before, so I am not sure.
Tommarvoloriddle, where does the 50% come from? Usually when you use a numeric value indicating a probability, there should be a mathematical basis for it. This is doable for non-tangible concepts, such as feelings, but this requires evaluative experience with similar problems.
For example, if you have previously evaluated (N) of these types of problems, and the tabulations of the accuracy your assessments indicate that you are correct 50% of the time, then your 50% certainty is valid. However, your final statement says you have “never done these types of problems before ....” Knowing this, your confidence should be very close to zero (0) instead of the 50% you indicated.
Over time, intuition (feelings) will form as you continue to develop your skills in mathematics. Intuition is a very common thought process in all skilled, Master and PhD-Level mathematicians and scientists. However, such intuition is never an acceptable substitute for a demonstrative proof of concept.
Offering opinions without the minimum required skill sets in the subject puts you in to the BS class. The world is full of amateur and professional BSers in and on every subject. We do not need anymore! Until you develop these skills, you should keep your comments at inquiring observer level.
Here’s an example of where you missed a subtle, but very important word that changes a solution.
Wow, Thank you for a very detailed answer to a mistake in my answer.
The 50% is indicating the probability I actually get it right.
Sorry about the previous answer. A family member trolled me.
I have done these types of problems before, just that i don't get it right often, and I consider that a never ever done it before. Does that help?