Using a binomial distribution, the formula is:
P(r out of n) = (nCr)(p^r)(q^(n-r))
In this case, where p = 0.002, q = 1 - p = 0.998, n = 100 machines, and we want the probability that there will be fewer than 2 (r = 0, r = 1) inoperable:
P(0 out of 100) = 0.998^100 = 0.8186
P(1 out of 100) = (100)(0.002)(0.998^99) = 0.1640
Adding these up gives 0.8186 + 0.164 = 0.9826.