Question 275929: The probability that a small business will go bankrupt in its first year is .21. For 50 such small businesses, find the following probabilities first by using the binomial probability formula, and then by using the normal approximation.
a. Exactly 8 go bankrupt.
b. No more than 2 go bankrupt.
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! The probability that a small business will go bankrupt in its first year is .21. For 50 such small businesses, find the following probabilities first by using the binomial probability formula, and then by using the normal approximation.
a. Exactly 8 go bankrupt.
binomial: binompdf(50,0.21,8) = 0.1019
normal approx: normalcdf(7.5,8.5,0.21*50,sqrt(0.21*50*0.79) = 0.0949
=========================
b. No more than 2 go bankrupt.
binomial: binomcdf(50,0.21,2) = 0.0007674
normal approx: normalcdf(0,2.5,0.21*50,sqrt(0.21*50*0.79) = 0.0026
=========================
Cheers,
Stan H.
|
|
|
