Answer:
a) The 90% confidence interval for the mean amount owed in student loans of graduates of four-year business colleges is ($13,600, $15,162), having a margin of error of $781.
b) We are 90% sure that the mean amount owed in student loans of graduates of all four-year business colleges is between $13,600 and $15,162.
Step-by-step explanation:
Question a:
We have the standard deviation for the sample, which means that the t-distribution is used to solve this question.
The first step to solve this problem is finding how many degrees of freedom,which is the sample size subtracted by 1. So
df = 25 - 1 = 24
90% confidence interval
Now, we have to find a value of T, which is found looking at the t table, with 24 degrees of freedom(y-axis) and a confidence level of [tex]1 - \frac{1 - 0.9}{2} = 0.95[/tex]. So we have T = 2.0639
The margin of error is:
[tex]M = T\frac{s}{\sqrt{n}} = 2.0639\frac{1892}{\sqrt{25}} = 781[/tex]
In which s is the standard deviation of the sample and n is the size of the sample.
The lower end of the interval is the sample mean subtracted by M. So it is 14381 - 781 = $13,600
The upper end of the interval is the sample mean added to M. So it is 14381 + 781 = $15,162
The 90% confidence interval for the mean amount owed in student loans of graduates of four-year business colleges is ($13,600, $15,162), having a margin of error of $781.
b) Interpret the confidence interval you have computed.
We are 90% sure that the mean amount owed in student loans of graduates of all four-year business colleges is between $13,600 and $15,162.