Question

All day laborers of a large manufacturing company receive a 2% raise every 6 months. The current mean hourly wage earned by the all day laborers is $9.75 per hour and the standard deviation of their hourly wages is $0.87 per hour. Assuming that the raise rate and frequency remain the same, what will the mean and standard deviation of the hourly wages earned by day laborers be 2 years from now

Answer 1

`\=x'=\$10.55`

`\sigma'=10.55`

Explanation:

From the question we are told that:

Raise
`r=2\%` at Time interval 6 months

Time
`t=2 years`

Mean hourly pay
`\=x=$9.75`

Standard deviation
`\sigma=\$0.87`

Generally the equation for mean is mathematically given by

`\=x=P*(1+r)^n`

Where

`P=Principle\ mean`

`n=number\ of\ intervals`

`n=2years/6months`

`n=4`

Therefore

`\=x'=9.75*(1+0.02)^4`

`\=x'=\$10.55`

Generally the equation for Standard deviation is mathematically given by

`\sigma'=P'*(1+r)^n`

Where

`P'=Principle\ Standard\ deviation`

Therefore

`\sigma'=0.87*(1+0.02)^4`

`\sigma'=10.55`