Private Colleges and Universities Rely on Money Contributed by Individuals $\overline{ X }= 180.975$

question 99

Multiple Choice

Private colleges and universities rely on money contributed by individuals and corporations for their operating expenses. Much of this money is put into a fund called an endowment, and the college spends only the interest earned by the fund. A recent survey of 8 private colleges in the United States revealed the following endowments (in millions of dollars) : 60.2, 47.0, 235.1, 490.0, 122.6, 177.5, 95.4, and 220.0. Summary statistics yield $\overline{ X }= 180.975$ and s = 143.042. Calculate a 95% confidence interval for the mean endowment of all the private colleges in the United States assuming a normal distribution for the endowments.

• A) $180.975 ± $116.621
• B) $180.975 ± $94.066
• C) $180.975 ± $119.586
• D) $180.975 ± $99.123

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Definitions:

Capital Investment Analysis

The process of evaluating the potential returns and risks associated with investing in long-term assets to aid in decision making.

Manufacturing Productivity

A measure of the efficiency of a manufacturing process, typically calculated by dividing output by input.

Present Value

The immediate value of an upcoming lump sum or series of financial inflows, quantified by a specific rate of return.

Compound Interest

The addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest, making the sum grow at a faster rate than simple interest.