Kevin gets and auto loan of $12,000 at 8% annual interest. The terms of his loan state that he has to pay 292.96 each month for
1 answer:
You might be interested in
Answer:
And we can use the following excel code to find the answer: "=NORM.DIST(-0.704,0,1,TRUE)"
Step-by-step explanation:
Previous concepts
Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".
The Z-score is "a numerical measurement used in statistics of a value's relationship to the mean (average) of a group of values, measured in terms of standard deviations from the mean".
Solution to the problem
Let X the random variable of interest for a population, and for this case we know the distribution for X is given by:
Where and
We are interested on this probability
And the best way to solve this problem is using the normal standard distribution and the z score given by:
If we apply this formula to our probability we got this:
And we can find this probability on this way:
And we can use the following excel code to find the answer: "=NORM.DIST(-0.704,0,1,TRUE)"