Suppose that a company CEO for Quitters, Inc. claims that the average severance

Question

Suppose that a company CEO for Quitters, Inc. claims that the average severance package for an employee at his company is $450,000. You decide to test his claim using a significance level of =.04. A sample of 40 employees yields a mean of x=414,845 with a sample standard deviation of s=%125,575. First, you set up your hypotheses as follows:

Ho= =$450,000

H1= does not equal $450,000

Then you compute your sample statistic and get the following:

z -1.77

Compute the probability of getting a sample statistic at least as extreme as z= -1.77, and then interpret this probability value.

a) the p value is small enough to reject the claim

b)the p value is not small enough to reject the claim

Explanation / Answer

P value is 0.383. We double it because it is a two tailed test and get .0767. It's way above alpha so b)the p value is not small enough to reject the claim

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