TABLE 9-2 a Student Claims That He Can Correctly Identify Whether a Whether

question 100

Multiple Choice

TABLE 9-2
A student claims that he can correctly identify whether a person is a business major or an agriculture major by the way the person dresses. Suppose in actuality that if someone is a business major, he can correctly identify that person as a business major 87% of the time. When a person is an agriculture major, the student will incorrectly identify that person as a business major 16% of the time. Presented with one person and asked to identify the major of this person (who is either a business or agriculture major) , he considers this to be a hypothesis test with the null hypothesis being that the person is a business major and the alternative that the person is an agriculture major.
-Referring to Table 9-2, what is the value of ??

• A) 0.87
• B) 0.84
• C) 0.13
• D) 0.16

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Definitions:

Present Value

The present value of a future amount of money or series of cash flows, based on a particular rate of return.

Future Cash Inflows

Projected cash earnings from investments, operations, or financial instruments over a specified future period.

Net Present Value

A method of evaluating the profitability of an investment by calculating the difference between the present value of cash inflows and outflows over a period of time.

Present Value

The value today of an anticipated sum of money or sequence of cash flows, when calculated with a certain return rate.