An amount of $25,000 is borrowed for 9 years at 9% interest, compounded annually. If the loan is paid in full at the end of that
1 answer:
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Answer:
D. 0.9938.
Step-by-step explanation:
To solve this question, we need to understand the normal probability distribution and the central limit theorem.
Normal Probability Distribution
Problems of normal distributions can be solved using the z-score formula.
In a set with mean and standard deviation
, the z-score of a measure X is given by:
The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the p-value, we get the probability that the value of the measure is greater than X.
Central Limit Theorem
The Central Limit Theorem establishes that, for a normally distributed random variable X, with mean and standard deviation
, the sampling distribution of the sample means with size n can be approximated to a normal distribution with mean
and standard deviation
.
For a skewed variable, the Central Limit Theorem can also be applied, as long as n is at least 30.
Mean of 115 and a standard deviation of 8.
This means that
100 people are randomly selected
This means that
Find the probability that their mean blood pressure will be less than 117.
This is the p-value of Z when X = 117, so:
By the Central Limit Theorem
has a p-value of 0.9938, and thus, the correct answer is given by option D.