Allied Corporation Is Trying to Determine Whether to Purchase Machine

question 144

Essay

Allied Corporation is trying to determine whether to purchase Machine A or B. It has leased the two machines for a month. A random sample of 5 employees has been taken. These employees have gone through a training session on both machines. Below you are given information on their productivity rate on both machines. (Let d  Machine A  Machine B.)

a.State the null and alternative hypotheses for a two-tailed test.
b.Find the mean and standard deviation for the difference.
c.Compute the test statistic.
d.Test the null hypothesis stated in Part a at the 10% level.

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Definitions:

Compound Interest

The interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Present Value

The assessed current value of a future monetary amount or series of financial flows, at a given rate of return.

Compound Interest

Refers to the addition of interest to the principal sum of a loan or deposit, where the added interest also earns interest from then on. This effect makes a sum grow at a faster rate compared to simple interest, which is calculated only on the principal amount.

Present Value

The current value of a future cash amount or ongoing cash flows, when calculated with a specific return rate.