A Major Automobile Manufacturer Claimed That the Frequencies of Repairs

question 95

Essay

A major automobile manufacturer claimed that the frequencies of repairs on all five models of its cars are the same. A sample of 200 repair services showed the following frequencies on the various makes of cars.
$\begin{array}{ll}\text { Model of Car }&\text { Frequency }\\\mathrm{A} & 32 \\\mathrm{~B} & 45 \\\mathrm{C} & 43 \\\mathrm{D} & 34 \\\mathrm{~E} & 46\end{array}$ At α = 0.05, test the manufacturer's claim.

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Definitions:

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Net Cash Flow

The sum of all cash receipts minus all cash payments over a period, reflecting the company's liquidity position.

Payback Period Method

A capital budgeting technique that calculates the time needed for an investment to generate cash flows sufficient to recover the initial investment cost.

Capital Budgeting Decisions

The process of planning and evaluating investments in long-term assets, considering their potential to generate future profits.