Table 44
Mr -Using the Information in Table 4

question 7

Multiple Choice

Table 4.4
Mr. Lee is considering a capacity expansion for his supermarket. The annual sales projected for the next five years follow. The current capacity is equivalent to $300,000 sales. Assume a 20 percent pretax profit margin.
$$\begin{array} { | c | c | } \hline \text { Year } & \begin{array} { c } \text { Annual Sales } \\( \$ 000 ) \end{array} \\\hline 1 & 310 \\2 & 320 \\3 & 340 \\4 & 370 \\5 & 400 \\\hline\end{array}$$
-Using the information in Table 4.4,if Lee expands the capacity to an equivalent of $360,000 sales now (year 0) ,how much would pretax cash flow in year 5 increase because of this expansion?

• A) less than $7000
• B) more than $7000 but less than $10,000
• C) more than $10,000 but less than $13,000
• D) more than $13,000

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Definitions:

Test Statistic

A quantity derived from sample data and used in statistical hypothesis testing to decide whether to reject the null hypothesis.

P-Value

The likelihood of witnessing outcomes in a test that are as extreme or more so than the observed ones, provided that the null hypothesis is accurate.

Randomized Block Experiment

An experimental design that aims to reduce the effects of variables known as blocks by randomly assigning treatments within each block.

Rank Sums

A statistic used in non-parametric tests that involves summing the ranks of observations in one of two samples when comparing medians.