Question

7) You are trying to decide whether to invest in a monthly income investment plan that promises a variable return each month. You will invest in it only if you are assured of an average $150 monthly income. After doing research, you find that for the past 400 months, the plan had investment returns with an average value of $170 and a standard deviation of $85. Should you invest in this plan? Use a significance level of ? = 0.01.

a) State the hypotheses in symbols. (2 points)

b) Use your calculator to perform a 1-Sample t-Test and report the test statistic and p-value. Do not make these calculations by hand. Instead, use the T-Test command in your graphing calculator found under STAT – TESTS. Write out what you entered in your calculator. (3 points)

c) Write a full conclusion for this test in the context of the problem (see problem 2b) (2 points)

d) Find a 98% confidence interval for the average value of the monthly income. Do not make these calculations by hand. Instead, use the TInterval command in your graphing calculator found under STAT – TESTS. Write out what you entered in your calculator. (3 points)

e) Does this confidence interval support your conclusion in part (d)? Explain. (2 points)

Answer 1