JewelMist.com estimates the cost of relocating its headquarters to Los Gatos, CA with a normal distribution centered on $9.5 million and having a standard deviation of $1.1 million.JewelMist wants to budget for the move so that there's only a 1% chance that the actual cost will exceed the budgeted amount.JewelMist should budget how many millions of dollars.
A)11.725
B)9.901
C)11.882
D)12.063
E)10.926

Question

Quizplus · Accepted Answer

To find the budgeted amount with only a 1% chance of exceeding, we need to find the 99th percentile of the normal distribution. Using the Z-score table, the Z-score for 99% is approximately 2.33. The budgeted amount is calculated as: Mean + (Z-score * Standard Deviation) = 9.5 + (2.33 * 1.1) = 12.063 million dollars.

JewelMistCom Estimates the Cost of Relocating Its Headquarters to Los