Hi, I need help solving this problem;
On average Billy receives an annual income of $1000 (standard deviation 200) in royalties and $700 (standard deviation 50) per year in other income. The royalties are taxed at 30% and while the "other income" is taxed at 10%. What is the probability that his combined annual income will be greater than 1600 in any given year?
His total average income will be
income=1000(0.70)+700(0.90)= 1330
with a total variance of
income=200^2(0.70)^2+50^2(0.90)^2= 1330
and a standard deviation 36.469
Z test
p(z>1600)
(1600-1330)/36.469=7.403
that's not on the table, so the chances of earning greater than 1600 is o
is this correct?
Thanks
On average Billy receives an annual income of $1000 (standard deviation 200) in royalties and $700 (standard deviation 50) per year in other income. The royalties are taxed at 30% and while the "other income" is taxed at 10%. What is the probability that his combined annual income will be greater than 1600 in any given year?
His total average income will be
income=1000(0.70)+700(0.90)= 1330
with a total variance of
income=200^2(0.70)^2+50^2(0.90)^2= 1330
and a standard deviation 36.469
Z test
p(z>1600)
(1600-1330)/36.469=7.403
that's not on the table, so the chances of earning greater than 1600 is o
is this correct?
Thanks