Find the maturity value of a loan of $2500 at simple interest that is to be repaid in 8 months. The interest rate is 4.3%.
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Solution: Yes, the random variable y will have a binomial distribution. Because there are two possible outcomes 1. number of days of rain and 2. number of days of no rain.
The parameters of binomial distribution are and
The parameter n is given as the number of day's under consideration.
The parameter p is not given, but it can be estimated by number of days it rained divided by the total number of days under consideration.