An investor obtains a balloon mortgage with the terms shown below.
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Answer:
The critical value is T = 1.895.
The 90% confidence interval for the mean repair cost for the washers is between $48.159 and $72.761
Step-by-step explanation:
We have the standard deviation for the sample, so we use the t-distribution.
The first step to solve this problem is finding how many degrees of freedom, we have. This is the sample size subtracted by 1. So
df = 8 - 1 = 6
90% confidence interval
Now, we have to find a value of T, which is found looking at the t table, with 6 degrees of freedom(y-axis) and a confidence level of . So we have T = 1.895, which is the critical value.
The margin of error is:
In which s is the standard deviation of the sample and n is the size of the sample.
The lower end of the interval is the sample mean subtracted by M. So it is 60.46 - 12.301 = $48.159
The upper end of the interval is the sample mean added to M. So it is 60.46 + 12.301 = $72.761
The 90% confidence interval for the mean repair cost for the washers is between $48.159 and $72.761