Business: CEO Raises Are America\'s top chief executive officers (CEOs) really w
ID: 3236624 • Letter: B
Question
Business: CEO Raises Are America's top chief executive officers (CEOs) really worth all that money? One way to answer this question is to look at row B, the annual company percentage increase in revenue, versus row A, the CEO's annual percentage salary increase in that same company (Source: Forbes, Vol. 159, No. 10). A random sample of companies such as Deere & Co..General Electric, Union Carbide, and Dow Chemical yielded the following data: Do these data indicate that the population mean percentage increase in corporate revenue (row B) is different from the population mean percentage increase in CEO salary? Use a 5% level of significance.Explanation / Answer
Answer:
Ho:µ1=µ2 H1: µ1 µ2
Calculated t=0.4334
DF = n1+n2-2 =14
Table value of t with 14 DF at 0.05 level = 2.1448
Rejection region: Reject Ho if t < -2.1448 or t > 2.1448
Calculated t = 0.4334 < 2.1448 , the table value
The null hypothesis is not rejected.
We conclude that the population mean percentage increase in corporate revenue is not different from the population mean percentage increase in CEO salary.
Pooled-Variance t Test for the Difference Between Two Means
(assumes equal population variances)
Data
Hypothesized Difference
0
Level of Significance
0.05
Population 1 Sample
Sample Size
8
Sample Mean
19.75
Sample Standard Deviation
10.66034039
Population 2 Sample
Sample Size
8
Sample Mean
17.5
Sample Standard Deviation
10.09950494
Intermediate Calculations
Population 1 Sample Degrees of Freedom
7
Population 2 Sample Degrees of Freedom
7
Total Degrees of Freedom
14
Pooled Variance
107.8214
Standard Error
5.1919
Difference in Sample Means
2.2500
t Test Statistic
0.4334
Two-Tail Test
Lower Critical Value
-2.1448
Upper Critical Value
2.1448
p-Value
0.6713
Do not reject the null hypothesis
Pooled-Variance t Test for the Difference Between Two Means
(assumes equal population variances)
Data
Hypothesized Difference
0
Level of Significance
0.05
Population 1 Sample
Sample Size
8
Sample Mean
19.75
Sample Standard Deviation
10.66034039
Population 2 Sample
Sample Size
8
Sample Mean
17.5
Sample Standard Deviation
10.09950494
Intermediate Calculations
Population 1 Sample Degrees of Freedom
7
Population 2 Sample Degrees of Freedom
7
Total Degrees of Freedom
14
Pooled Variance
107.8214
Standard Error
5.1919
Difference in Sample Means
2.2500
t Test Statistic
0.4334
Two-Tail Test
Lower Critical Value
-2.1448
Upper Critical Value
2.1448
p-Value
0.6713
Do not reject the null hypothesis
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