A Friend of Yours, Who Is Not Taking Statistics, Wonders

question 8

Essay

A friend of yours, who is not taking statistics, wonders why it is that anyone would choose to take a sample. "Obviously," she says, "you would get better information from a census." In a short paragraph, explain why it is that statisticians take samples rather than taking a census.

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Definitions:

Profitability Index

A financial tool used to measure the relative profitability of an investment project, calculated as the present value of future cash flows divided by the initial investment.

Required Rate

The Required Rate, often known as the required rate of return, is the minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular project or investment.

Cash Flows

The total amount of money being transferred into and out of a business, considered as the lifeblood of corporate finance.

Discounted Payback Period

The time it takes for the cash inflows from a capital investment project to equal the initial outlay, adjusted for the time value of money.