Engineers at a tire manufacturing company investigated the effect of a new rubber compound on the tire life of a certain brand o
f tires. From a sample of 16 tires, the engineers constructed a 99 percent confidence interval for the mean tire life, in miles, as 62,550±2,026. Suppose the company intends to claim a maximum tire life for advertising purposes. Based on the interval, of the following, which is the maximum plausible value for the mean tire life, in miles?
When the companies advertise their new products they want to present the product in the best possible light as possible. This is due to edging out the competition as in many products small details make a huge difference. The same is the case with the tires and their endurance. The longer way a set of tires takes you the better, since they are expensive product so changing them less often is very beneficial.
In this case, the interval for the mean tire life varies by 2,026 from 62,550, both up and down. The minimum will be 60,524 miles, while the maximum a tire can pass is 64,576. The company will of course go for the maximum value to make the product look as attractive and as good as possible to the customers.
Depreciation is an element for Non-Cash. This is, there is no cash payment involved. If depreciation is an allowable expense then it reduces the company's tax burden. In other words, by paying depreciation as allowance cost the corporation can save the tax amount. The depreciation thus raises Net Cash From Service.