Question

[Porter Company Account Receivables] Josephine Porter, who manages her family’s tool and die business, is very concerned about the possibility of default on accounts payable by customers, and has asked for an audit of accounts payable for sales made in June 2009, for the proportion that are now considered in default. Use this information to answer questions 13 to 15. 13. If she does not have any idea about the true proportion of accounts that are in the default, what size sample size does she need if she wants the width of a 95% confidence interval for the proportion of accounts that are in default to be no more than 3.5%? (a) 114 (b) 216 (c) 3,136 (d) 453 14. Porter’s auditors inspected a random sample of n = 500 accounts payable for June 2009 sales, and found 7.6% in default. Which of the following is a 90% confidence interval for the true proportion of accounts that are in default? (a) [0.0528, 0.0992] (b) [0.0455, 0.1065] (c) [0.0410, 0.1110] (d) [0.0565, 0.0955]

Answer 1

Margin of error = width/2

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