You are an accountant who is performing the annual audit of the accounts at Hook

Question

You are an accountant who is performing the annual audit of the accounts at Hookem, Billem, and Soakem, a large cellular telephone company. From past experience it is known that 8% of the accounts at Hookem, Billem, and Soakem have errors. Use this Excel file http://www.webassign.net/userimages/geometric.xls?db=v4net&id=52687 (enable the macro after opening the file) or this Excel file geometric probabilities 2 to assist you with the geometric probability calculations required to answer the questions below.

What is the probability that the first account with an error is the 5th audited account?

What is the expected number of accounts that you will audit until you find the first error?

What is the probability that the first account with an error is among the first 5 accounts that you check?

Explanation / Answer

1)probability that the first account with an error is the 5th audited account =P(first 4 are correct and 5th has error)

=(1-0.08)4*0.08=0.0573

2)expected number of accounts that you will audit until you find the first error =1/p =1/0.08 =12.5

3) probability that the first account with an error is among the first 5 accounts that you check =1-P(till first 5 no error account is found) =1-(0.92)5 =0.340918

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