An electric guitar costs $830, with a $225 full-replacement warranty. If the manufacturer sells 532,475 warranties and has to honor 12% of them, how much profit did the manufacturer gain from the warranties?

The manufacturer earns $225 for each of 532,475 warranties, for total revenue of $119,806,875. It must replace 12% of the guitars: 0.12 × 532,475 = 63,897 guitars, costing 63,897 × $830 = $53,034,510. Subtracting replacement costs from revenue gives a profit of $66,772,365, choice B.

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