3. Piyush, who had joined the infrastructure department of the bank, was asked to estimate the rental value of commercial property at Ranchi, for the purpose of identifying suitable premises for locating a new branch. Piyush assessed the standard deviation of the value of the property at s = Rs. 35,000 (the value of the property being normally distributed). A random sample of 16 properties gave a sample mean of Rs. 6,97,630.
a. Give a confidence interval at 95% level of significance for the average value of all properties of this kind. Also interpret the results.
b. Assuming that the area of the property considered is 6,000 sq. ft. and the bank is looking forward to rental values in the range of Rs. 100 per sq. ft.
Are the results arrived in option (a) in line with the expectations of the bank?
8 answers