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1. The Department of Transportation would like to test the hypothesis that the average age of cars on the road is less than 10 years. A random sample of 50 cars had an average age of 9.5 years. It is believed that the population standard deviation for the age of cars is 3.4 years. The Department of Transportation would like to set = 0.10. The conclusion for this hypothesis test would be that because the test statistic is

A. more than the critical value, we can conclude that the average age of cars on the road is less than 10 years.

B. more than the critical value, we cannot conclude that the average age of cars on the road is less than 10 years.

C. less than the critical value, we can conclude that the average age of cars on the road is less than 10 years.

D. ess than the critical value, we cannot conclude that the average age of cars on the road is less than 10 years.

2. The p-value for a hypothesis test is defined as the probability of observing a

A. critical value at least as extreme as the one selected for the hypothesis test, assuming the null hypothesis is true.

B. critical value at least as extreme as the one selected for the hypothesis test, assuming the null hypothesis is false.

C. sample mean at least as extreme as the one selected for the hypothesis test, assuming the null hypothesis is true.

D. population mean at least as extreme as the one selected for the hypothesis test, assuming the alternative hypothesis is true.

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Jamar Ferry
Jamar FerryLv2
28 Sep 2019

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John is an attorney in a small firm, he is 32 years old and currently earning $78,000 a year. John must continue paying back his student loan by making monthly payments of $300 per month for the next three years at an interest rate of 5% per year. John is married and has three children, Billy, age 2. Cindy, age 6, and sally, age 10. Johns wife, Mary, currently is a stay-at-home mom. When billy is old enough to attend school, Mary hopes to get a job as an administrative assistant in the children's school. That position pays about $20,000 per year. Mary has a high school diploma and a certificate showing she completed one year of practical secretarial training. Mary is 34 years old. John and Mary pay $900 per month for their home mortgage, which will be paid off in 20 years. The interest rate on their mortgage is 4.0%. (Their current equity in the home is $36,000.) The couple own two cars, both 10 years old, and personal property (such as clothes, electronics, furniture, etc) valued at $45,000. Their investments include checking, savings, and mutual fund accounts equal to $8,000. John has no life insurance. Mary has a $25,000 whole life insurance policy that was given to her by her parents when she turned 18. If John should die, Mary would receive approximately $5,000 per year for each child 18 years of age or younger.

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1) Assuming neither John nor Mary will receive large inheritances, how much life insurance do you think John needs? Calculate the amount using the needs approach. Show all calculations and explain your answer. Also indicate the type of insurance you would recommend, whole life or term. If you recommend term, specify length of the term policy.

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