The Time Between Equipment Failures (In Days)at a Particular Factory

question 81

Essay

The time between equipment failures (in days)at a particular factory is exponentially
distributed with a mean of 4.5 days. A machine just failed and was repaired today.
a. Find the probability that another machine will fail within the next day.
b. Find the probability that there will be no more equipment failures in the next week.

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Definitions:

Ex-dividend

The ex-dividend date is the date on which a stock begins trading without the entitlement to receive the most recently declared dividend, meaning buyers from that day onward will not receive the dividend.

Marginal Tax Rate

Amount of tax payable on the next dollar earned.

Cost of Equity

Cost of equity is the return that investors expect from an investment in a company, considering the risk of investing in its equity.

Stock Split

An action taken by a company to divide its existing shares into multiple shares to boost the liquidity of the shares, though the market value of the company does not change.