An insurance company estimates 40 percent of its claims have errors. The insurance company wants to estimate with 90 percent confidence the proportion of claims with errors. What sample size is needed if they wish to be within 5 percent of the actual?

Answer 1

Try this formula:
n = [(z-value)^2 * p * q]/E^2

Find the z-value for 90% confidence using a z-table. p = .4; q = .6 (q = 1-p); and E = .05

Round n to the next highest whole number.