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he CFO of a company selling computer software through mega stores claims that average monthly profits throughout country will exceed $1 billion, with a standard deviation of $0.10 billion. A sample survey of software sales in 36 mega stores revealed an average monthly profit of $1.2 billion. You are asked to test the CFO's claim by examining monthly profits from the sample mega stores using the Z-test.

A) State Ho and H1 for this claim.

B) Is this an upper tailed, lower tailed or two-tailed test? Why?

C) State the decision rule using α = 0.05 significance level? [First find out tabular or critical z value using standard normal distribution table. Then, state the condition under which Ho is rejected).

D) Compute Z- statistic (z-calculated).

E) What is the p-value?

F) What is your decision regarding Ho? ACCEPT or REJECT? Why?

G) Write your conclusion regarding the CFO's claim? Was the claim correct or incorrect?

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Statistics and Probability, Statistics

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