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Question 1: Single mean An information technology company is required to estimate the average value of...

Question 1: Single mean

An information technology company is required to estimate the average value of its computers for insurance purposes. There are 1,350 employees and each one has been issued a computer. The company requires a 95% confidence interval for the total value of computers in the company.

A random sample of 150 computers gives a sample mean value of £680, with a sample standard deviation of £55.

The insurance company charges a flat-rate premium for a total insurance amount up until £900,000. If the total insurance amount is higher than that, the premium is 10% more. An alternative insurance company charges a flat-rate premium for a total insurance amount up until £1,000,000. It the total insurance amount is higher than that, the premium is 12% more. The flat-rate premiums of both insurance companies are the same.

Answer the following questions:

  • Navigate to the “Confidence interval” tab and calculate the confidence interval for the average price per computer. What do these values mean?
  • Convert the calculated confidence interval to the total value of all computers. What do these values mean?
  • Elaborate on whether the information technology company should remain with its current insurer or switch to the alternative, based on the estimated total value of all the computers.
  • Navigate to the “Sample size” tab and calculate how many more computers need to be included in the sample size to estimate the true mean value per computer to within £5.
Math   Statistics-And-Probability   
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