Question

Builtrite has calculated the average cash flow to be $16,000 with a standard deviation of $2,500. What is the probability of a cash flow being greater than $12,250

Answer 1

P=93.32%

Step-by-step explanation:

Calculation for the probability of a cash flow

Mean =μ=$16,000

Standard Deviation =σ=$2,500

P(x > $12,250) = 1 - P(x <$12,250 )

= 1 - P(z < x - μ ) / σ =1 - P ( z < $12,250- $16,000) / $2,500)

P(x > $12,250) = 1 - P(z <$3,750/$2,500 )

P(x > $12,250) = 1 - P(z <$1.5 )

P=1-0.0668

P=0.9332*100

P=93.32%

Therefore the probability of a cash flow being greater than $12,250 is 93.32%