Question

An analyst is forecasting net income for Excellence Corporation for the next fiscal year. Her low-end estimate of net income is $250,000, and her high-end estimate is $350,000. Prior research allows her to assume that net income follows a continuous uniform distribution. The probability that net income will be greater than or equal to $337,500 is

Answer 1

`P(X \geq 337,500) = 0.125 = 12.5%`

Explanation:

probability distribution fucntion is given as

`F_x = P(X \leq x)`

`= (x -a)/(b -a)      a<x< b`

where a indicate lower end estimate = $250,000

b indicate high end estimate = $350,000

probability greater than $337500

`P(X \geq 337,500) = 1- P(X < 337500)`

`= 1 - (x -a)/(b -a)`

`= 1 - (337500 - 250000)/(350000 - 250000)`

`P(X \geq 337,500) = 0.125 = 12.5%`