David Files His Tax Return 45 Days After the Due

question 47

Multiple Choice

David files his tax return 45 days after the due date. Along with the return, David remits a check for $40,000 which is the balance of the tax owed. Disregarding the interest element, David's total failure to file and to pay penalties are:

• A) $400.
• B) $3,600.
• C) $4,000.
• D) $4,400.
• E) None of these.

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Definitions:

Probabilities

The measure of the likelihood that an event will occur, represented as a number between 0 and 1, where 1 indicates certainty.

Binomial Random Variable

A type of random variable that represents the number of successes in a sequence of n independent experiments.

Normal Approximation

A method used in statistics to approximate a binomial distribution with a normal distribution when the sample size is large and the probability of success is not too close to 0 or 1.

Cumulative Binomial Probabilities

The sum of probabilities of achieving a given number of successes in a fixed number of Bernoulli trials.