Question

Because of the relatively high interest rates, most consumers attempt to pay off their credit card bills promptly. However, this is not always possible. An analysis of the amount of interest paid monthly by a bank’s Visa cardholders reveals that the amount is normally distributed with a mean of $1,735 and a standard deviation of $285. What interest payment is exceeded by only 15% of the bank’s Visa cardholders?

Select one:

a. $2,031.40

b. $1,884.625

c. $1,438.60

d. $1,585.375

Answer 1

solution

Given that,

mean = = 1735

standard deviation = =285

Using standard normal table,

P(Z > z) = 15%

= 1 - P(Z < z) = 0.15

= P(Z < z ) = 1 - 0.15

= P(Z < z ) = 0.85

z =1.04 (using standard normal (Z) table )

Using z-score formula  

x = z * +

x=1.04 *285+1735

x= 2031.40

correct option a. $2,031.40