A Manager of the Credit Department for an Oil Company

question 18

Multiple Choice

A manager of the credit department for an oil company would like to determine whether the mean monthly balance of credit card holders is equal to $75. An auditor selects a random sample of 100
Accounts and finds that the mean owed is $83.40 with a sample standard deviation of $23.65. If
You were to conduct a test to determine whether the auditor should conclude that there is
Evidence that the mean balance is different from $75, which test would you use?

• A) Z-test of a population mean
• B) Z-test of a population proportion
• C) t-test of population mean
• D) t-test of a population proportion

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Definitions:

Capital Investment Proposals

Capital investment proposals are plans or suggestions submitted for consideration to undertake significant spending on projects expected to generate future returns.

Expected Future Net Cash Flows

The projection of cash receipts minus cash payments over a future period, considering all expected future transactions.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period, used in capital budgeting to assess the profitability of investments.

Compound Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan.