In a random sample of 100 audited estate tax returns, it was determined that the

Question

In a random sample of 100 audited estate tax returns, it was determined that the mean amount of additional tax owed was $3444 with a standard deviation of $2504.

Construct and interpret a 90% confidence interval for the mean additional amount of tax owed for estate tax returns.

The lower bound is _____. (Round to the nearest dollar as needed.)

The upper bound is ______. (Round to the nearest dollar as needed.)

Interpret a 90% confidence interval for the mean additional amount of tax owed for estate tax returns. Choose the correct answer below.

A. One can be 90% confident that the mean additional tax owed is greater than the upper bound.

B. One can be 90% confident that the mean additional tax owed is less than the lower bound.

C. One can be 90% confident that the mean additional tax owed is between the lower and upper bounds.

Explanation / Answer

At 90% confidence interval the critical value is Z0.95 = 1.645

Confidence interval = mean +/- Z0.95 * SD/sqrt (n)

= 3444 +/- 1.645 * 2504/sqrt(100)

= 3444 +/- 411.908

= 3032.092, 3855.908

So the lower bound is 3032.092

The upper bound is 3855.908

Option-C is the correct answer.

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