An analyst is forecasting net income for Excellence Corporation for the next fiscal year. Her low-end estimate of net income is $250,000, and her high-end estimate is $350,000. Prior research allows her to assume that net income follows a continuous uniform distribution. The probability that net income will be greater than or equal to $337,500 is ________.
A) 12.5%
B) 29.6%
C) 87.5%
D) 96.4%

Question

Quizplus · Accepted Answer

The probability is calculated as the length of the interval from $337,500 to $350,000 divided by the total length of the interval from $250,000 to $350,000. This is (350,000 - 337,500) / (350,000 - 250,000) = 12,500 / 100,000 = 0.125 or 12.5%.

An Analyst Is Forecasting Net Income for Excellence Corporation for the Next