Answer:
To be dropped, the client must have debts of $949.40 or lower.
Step-by-step explanation:
When the distribution is normal, we use the z-score formula.
In a set with mean and standard deviation
, the zscore 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 pvalue, we get the probability that the value of the measure is greater than X.
In this question:
Bottom 2.5%
The 2.5th percentile and lower.
The 2.5th percentile is X when Z has a pvalue of 0.025. So X when Z = -1.96. Then
To be dropped, the client must have debts of $949.40 or lower.