Homeowners Who Recently Bought Their Houses from a Local Developer

question 26

Multiple Choice

Homeowners who recently bought their houses from a local developer allege that 30% of the houses this developer constructs have some major defect that will require substantial repairs.To test this allegation, we randomly sample 20 houses constructed by the developer and find that two of the homes do, indeed, have some major defect.If the allegation is correct, what is the probability of observing at most two defective homes out of a random sample of 20?

• A) 0.0256
• B) 0.1000
• C) 0.0300
• D) 0.9744

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Definitions:

Net Method

An accounting method where discounts for early payment are assumed to be taken and purchase discounts are deducted from the cost of purchases.

Recording Purchases

The process of documenting the acquisition of goods or services in the financial records of an entity, impacting its inventory or expense accounts.

Periodic Inventory System

An accounting method that updates inventory levels and cost of goods sold at the end of an accounting period, not continuously.

Merchandise Inventory

The goods or products that a retailer or wholesaler intends to sell to customers for a profit.