Multi-Failure Scenario Warranty Decision
A photographer is purchasing a new camera and is offered a one-year warranty for $60. Based on industry data, they estimate there is a 15% chance of a minor issue occurring (e.g., a faulty button), which would cost $100 to repair. There is also a separate 5% chance of a major internal failure, which would cost $500 to repair. Assume these are the only two possible failures. Based on a purely financial analysis of expected costs, should the photographer purchase the warranty? Justify your answer with calculations.
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