2217 Words9 Pages

Keller Graduate School of Management
Project Part B:
Answer a. In this part of the project I am going to test the manager’s claim that the average mean annual income was less than $50,000. The hypothesis testing is done through the following steps:
The null hypothesis H0 is that the mean annual income μ is equal to $50,000. H0:μ = $50,000.
The alternative hypothesis H1 is that the mean annual income μ is less than $50,000. H1:μ < $50,000 Significance level chosen is 5% or α = 0.05
Here, the population standard deviation is unknown. Hence, we use a t statistic Therefore the test statistic used is t = X-μS/n follows a t distribution with n-1 degrees of freedom
From the t table corresponding to 0.05 probability, the critical value tα =1.6766. Hence the critical region is t < -1.6766. Alternatively, we reject the null hypothesis, if the p value is less than the significance level
Substituting the value we get t = 43.74-5014.6396/50 = -3.02 The p value corresponding to t = -3.02 and 49 d.f. is 0.002 which is smaller than the significance level.
The value of the test statistic is in the critical region and hence it is significant. Therefore, we reject the null hypothesis at 5% level of significance.
The p-value is 0.002 which is smaller than the significance level. Hence there are 0.002 chances that such a small value can observe when the null hypothesis is true. Since, this probability is smaller than the significance level we reject the null hypothesis at 5% level.
Hence, we conclude that there is enough evidence to support the manager’s claim that the average annual income was less than $50,000.
b. The claim is that the true population proportion of customers who live in an urban area exceeds 40%. In the given sample of size 50, thirteen are from the ‘Urban’.
The null hypothesis H0

Related

## Dfa Case Essay

383 Words | 2 PagesThe average performance of DFA large company value fund has very small difference with crsp cap decile #1. It is a little lower than S&P 500. It means the portfolio is diversified to eliminate unsystematic risk, but tracking error is also exist.The reason of the tiny difference may be timing or security selection. the tiny difference may be timing or security selection. What conclusions can you draw from all this?

## Income Elasticity of Demand

748 Words | 3 PagesIf it is more is elastic, if it is less is inelastic and if it is equal is unit elastic and quantity demanded changes by the same percentage as the price. Normal goods As income rise more is the demand. The house market in San Diego County is an example of a normal good that has turned for some into a luxury although housing is per se a need. In a recent article from Union Tribune San Diego was ranked as the second less affordable city to buy a house in the United States (Horn, 2014). Indeed, in other study the author says that the median income for households falls below what the market price requires by -25.90% (2012).

## Nike Case Essay

1294 Words | 6 Pages* Risk premium: using the geometric mean from 1926 to 1999 might be problematic, since the risk premium of recent decades is obviously lower than earlier (stated in the lecture). So we think a range of 3% to 5% is more reasonable. * Cost of Debt: Joanna’s calculation is based on the items on the income statement. However, when calculating cost of debt, we should consider the opportunity cost rather than the accounting cost. We should perceive the opportunity cost as the return investors will expect to earn somewhere else when accepting similar risk.

## Exercise 31 Essay

807 Words | 4 PagesWhat does this result mean? The t ratio of -0.65 represents the smallest relative difference between the pretest and 3 months outcomes. This ratio does not have an asterisk next to it in the table which according to the footnotes the asterisk is said to represent p < 0.05 the least stringent acceptable value for statistical significance. 4. What are the assumptions for conducting a t-test for dependent groups in a study?

## Allegro Case Analysis

398 Words | 2 PagesThis shows us that discounting the machine will not bring positive cash flows to the buying company. This GRAPH shows us that even though they would’ve met their 5 years maximum plan this opportunity of an investment would not be good because the values we get from the Buyers DCF is less than the current cost of the investment. I would have to decline this bid. Year | Number of Plates | Old Price Per Plate | New Price Per Plate | Buyer Cash Flow | Buyer DCF | Seller Cash Flow | Seller DCF | 1 | 225 | 5.00 | $2.00 | ($5,325) | ($5,325) | $2,335 | $2,335 | 2 | 225 | 5.15 | $2.06 | $695 | $695 | $329 | $329 | 3 | 225 | 5.30 | $2.12 | $716 | $716 | $342 | $342 | 4 | 225 | 5.46 | $2.19 | $738 | $738 | $357 | $357 | 5 | 225 | 5.63 | $2.25 | $760 | $760 | $371 | $371 | Year | Number of Plates | Old Price Per Plate | New Price Per Plate | Buyer Cash Flow | Buyer DCF | Seller Cash Flow | Seller DCF | | | | Totals | $584 | $584 | $3,734 | $3,734 | Client-Specific Parameters | | | | | | | Salvage Value (new machine) | $3,000 | | Salvage value of a new

## Quik Lube Case Study

686 Words | 3 PagesComparing the gross sales forecast to actual sales, this results in a loss of $309,445 in 2006 and $420,445 in 2007. [pic] Now, use the data in Table 1 and regression analysis, to compute the loss for Kwik Lube stations during the last two years. How accurate can results claim to be? |(untitled) Summary | |Measure |Value | |Error Measures | | |Bias (Mean Error) |0 | |MAD (Mean Absolute Deviation) |29611.49 | |MSE (Mean Squared Error) |1284291000 | |Standard Error (denom=n-2-0=6) |41381.01 | |MAPE (Mean Absolute Percent Error) |.03 | |Regression line | | |Dpndnt var, Y = 89527.02 | | |+ 2.78 * X1 | | |Statistics | | |Correlation coefficient |.99 | |Coefficient of determination (r^2) |.97 | Was it worth $30,000 to perform the marketing research that obtained the data in Table 1? If you were trying to determine if the return on the investment of $30,000 was worth the monetary loss alone, the answer is no.

## Standard Error and Regression

1378 Words | 6 Pages• When is an IID sample from a population t is a predetermined constant that depends on the sample size n and desired confidence level. • “±2 Standard Error” Rule of Thumb: Unless n ≤ 30 and precise confidence is needed, the approximate 95% CI is: • Typically stated at the 95% confidence level. But why 95%? “Ideally we would like a narrow 99.99% interval, since such an interval almost certainly contains the

## Sad Solution Essay

511 Words | 3 PagesProduct #1 is expected to earn no profit in the first year, $500 in the second year and $1,000 in the third year. Product #2 is expected to earn $500 per year for three years. Assume your cost of capital is 10%. Which product should you make? Present Value of #1 = $0 +

## Brown Fortman Case

1614 Words | 7 Pages4) Good luck! Part I (45 points): Short questions. Either fill in the blanks or mark something as True or False (no need to show calculations here). (1) The two main reasons why acquiring firms’ shareholders do not benefit much from acquisitions are that the acquirer: (2 points) The synergy benefit is over estimated during acquisition process Underestimate importance of “culture compatibility” (2) Suppose during a particular year a firm has a NOPAT of $400, increase in Net Fixed Assets of $50, increase in cash balances during the year of $20, and an increase in noncash net working capital of $45. What is this firm’s free cash flow for the year?

## Finance Essay

484 Words | 2 PagesIgnoring taxes, the correct opportunity cost for this machine in capital budgeting decisions is: A. $75,000 B. $25,000 C. $20,000 D. $5,000 4. What is the amount of the operating cash flow for a firm with $500,000 profit before tax, $100,000 depreciation expense, and a 35% marginal tax rate? A.

### Dfa Case Essay

383 Words | 2 Pages### Income Elasticity of Demand

748 Words | 3 Pages### Nike Case Essay

1294 Words | 6 Pages### Exercise 31 Essay

807 Words | 4 Pages### Allegro Case Analysis

398 Words | 2 Pages### Quik Lube Case Study

686 Words | 3 Pages### Standard Error and Regression

1378 Words | 6 Pages### Sad Solution Essay

511 Words | 3 Pages### Brown Fortman Case

1614 Words | 7 Pages### Finance Essay

484 Words | 2 Pages