For a random variable x, a new random variable y can be created by applying a li

Question

For a random variable x, a new random variable y can be created by applying a linear transformation y = a + bx, where a and b are constants. If the random variable x has mean mu Subscript x and standard deviation sigma Subscript x, then the mean, variance and standard deviation of y are given by the following formulas.

mu Subscript y Baseline equals a plus b mu Subscript x

sigma squared Subscript y Baseline equals b squared sigma squared Subscript x

sigma Subscript y Baseline equals |b| sigma Subscript x

The mean annual salary for employees at a company is $38 comma 000. At the end of the year, each employee receives a $5000 bonus and a 2% raise (based on salary). '

What is the new mean annual salary (including the bonus and raise) for the employees?

The new mean annual salary is????

.

Explanation / Answer

We are allowed to do 1 question at a time. Post again for second question.
2) Mean = 38000

So,

New mean = 38000 * 1.2 + 5000

Mean = 50,600

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