At age 25, to save for retirement, you decide to deposit $75 at the end of each month in an ira that pays 6.5% compounded monthl
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Answer:
Step-by-step explanation:
Data given and notation
s=0.038 represent the sample standard deviation
represent the sample mean
n=18 the sample size
Confidence=97.5% or 0.975
A confidence interval is "a range of values that’s likely to include a population value with a certain degree of confidence. It is often expressed a % whereby a population mean or variance lies between an upper and lower interval".
The margin of error is the range of values below and above the sample statistic in a confidence interval.
The Chi Square distribution is the distribution of the sum of squared standard normal deviates .
Calculating the confidence interval
The confidence interval for the population variance is given by the following formula:
The next step would be calculate the critical values. First we need to calculate the degrees of freedom given by:
Since the Confidence is 0.975 or 97.5%, the value of and
, and we can use excel, a calculator or a table to find the critical values.
The excel commands would be: "=CHISQ.INV(0.0125,17)" "=CHISQ.INV(0.9875,17)". so for this case the critical values are:
And replacing into the formula for the interval we got: