Chapter 8 Project

Annual profits per employee for financial service companies, such as Wells Fargo, First Bank
System, and Key Banks (in thousands of dollars per employee)

42.9 43.8 48.2 60.6 54.9 55.1 52.9 54.9 42.5 33.0 33.6

36.9 27.0 47.1 33.8 28.1 28.5 29.1 36.5 36.1 26.9 27.8

28.8 29.3 31.5 31.7 31.1 38.0 32.0 31.7 32.9 23.1 54.9

43.8 36.9 31.9 25.5 23.2 29.8 22.3 26.5 26.7

Part One:
A. Sample Size: 42 thousands of dollars per employee
B. Sample Mean: 36.0
C. Sample Standard Deviation: 10.24
D. Degrees of Freedom: 41 (used 40 on table)
E. Critical Values for 90%- 1.684, 95%- 2.021, and 99%- 2.704
a. 90% calculations: We found the critical value for 90% by using the table
4 T-distribution chart. We first went down to our degrees of freedom on
the left hand side, which was 41. Because there is no 41 on the table, we
used the next closest smaller number, which happened to be 40. After we
found our 40, we went over on the right side and found the 0.900 column.
Where these two values met on the table was our critical value, and for
90% the value is 1.684.
b. 95% calculations: We found the critical value for 95% using the same
table we used previously, table 4. We used 40 as our degrees of freedom,
and this time we went over to the 0.950 column. We found that 40
degrees of freedom and 95% come together at the critical value of 2.021.
c. 99% calculations: The critical value for 99% was found using the
T-distribution table. Using 40 as our degrees of freedom, we found that
2.704 was our critical value because that was the number at the
intersection of 40 degrees of freedom and 99%.
F. Max margin of error for 90%-2.66, 95%- 3.19, and 99%- 4.27
a. 90% calculations: In order to find the maximum margin of error, we used
the equation E = T c (s/n) . Once we had this equation we just had to
( )
plug in all of our values. E = 1.684 10.24/42 . Using this equation we
found that our maximum margin of error, in order to be 90% confident was
2.66 thousands of dollars.
 b. 95% calculations: When we calculated our 95% confident maximum
margin of error, we used the same equation: E = T c (s/n) . This time we
expected our margin of error to be a bit bigger, because our confidence
level was bigger and would therefore cover more data. We plugged in our
( )
values: E = 2.021 10.24/42 . This gave us a maximum margin of
error of 3.19 thousands of dollars in order to be 95% confident.
c. 99% calculations: In order to find this maximum margin of error, we used
the same equations as the other margin of errors: E = T c (s/n) . Our
confidence level was the higher than both of our other previous
calculations, because of this we assumed our E would be larger than the
previous calculations. This is because in order to have a confidence level
of 99%, you need to have a wider set of data to cover to be sure that
value falls within 99%. We found that our margin of error was 4.27
thousands of dollars, which was larger than the other two values as we
had expected. We found this by plugging in our values to the maximum
(
margin of error equation. E = 2.704 10.21/42 .)
G. Confidence intervals for : 90%: 33.34-38.66, 95%: 32.81-39.19,
and 99%: 31.73-40.27
a. 90% calculations: To find the confidence interval for 90% we first had to
find the margin of error, which is stated above in the Max margin of error
section, is 2.66, this number indicates the margin of error that is within
90% of our data set. We then subtracted E (margin of error) from our
X-Bar, which as stated above, is 36.0. When subtracting E from
X-Bar we receive the low end of our margin of error, which is 33.34, we
then have to calculate the high end of error, which can be done by just
adding E to our X-Bar so our equation looks like, (36.0+2.66), which
gives us an answer of 38.66. So, comparing our low and high end, we
receive a total interval of 33.34< < 38.66. This means that we are 90%
confident our average profit per employee is between 33.34 thousand
dollars and 38.66 thousand dollars.
b. 95% calculations: To find the interval for a 95% confidence basically has
the same equation as the calculation for the 90% confidence, the key
difference here is the margin of error E has changed. So instead of
subtracting and adding 2.66 (the E for 90%) we have to use the E we
found for the 95%, which is 3.19. We then find the low and high end of our
interval, so we add and subtract 3.19 from our X-Bar of 36.0, the
equations appear like this (36.0-3.19) and (36.0+3.19) which gives us the
intervals of 32.81< < 39.19. This means we are 95% confident that the
average profit per employee is between 32.81 thousand dollars and 39.19
thousand dollars.
 c. 99% calculations: We found our interval for the 99% confidence interval
by using the same equation we have for the 90% and 95%, the difference
again is only the E. The E for 99% is 4.27, this again needs to be
subtracted and added to our sample mean of 36.0. We subtract 4.27 from
the sample mean because this shows us the maximum margin of error
around the 99% confidence interval of 36.0. Our equations for the 99%
confidence interval are (36.0-4.27) and (36.0+4.27), which give us the
intervals of 31.73 < < 40.27. This means that we can say with 99%
confidence that our average profit per employee is between 31.73
thousand dollars and 40.27 thousand dollars.

Part Two:
A. How we found B and C
We found letters our sample mean and sample standard deviation, letters B and C, by
plugging in all our numbers from our data set into L1 in our calculator. We then used the 1-Var
Statistics and received the sample mean (B), which is X-Bar, and the Sample Standard
Deviation (C) which looks like s.
B. How we found A and D
We found letters our sample size and Degrees of Freedom by looking at the table given
to us, we counted all the numbers in our table and received a Sample Size (A) of 42. For the
Degrees of Freedom (D) all we had to do was subtract 1 by the Sample Size of 42, which is 41.
Unfortunately on the t-chart there is no number 41, so we used the closest number (rounding
down) which is 40.
C. Details
We have explained how we received each answer under our answers, and also have
related our answers back to our data by using units.
D. How our Equations would be different if we used Population Standard
Deviation
If we were given the population standard deviation, we would have approached our
calculations differently. Instead of using the t-chart table, table four, we would have used table
3, which tells the critical values of numbers. In addition, we would have used a different formula
to calculate our maximum margin of error. The new equation we would have used would have
been E = Z c (/n) . This would have provided us with a different margin of error, thus giving
us different confidence intervals.