A microchip has a life expectancy mean = 70 months, with standard deviation = 3.1 months. Satellite is insured for $50 million. If the satellite is insured for 71 months, what is the expected loss to the company?

Question

A microchip has a life expectancy mean = 70 months, with standard deviation = 3.1 months.  Satellite is insured for $50 million.  If the satellite is insured for 71 months, what is the expected loss to the company?

phi · Answer

what does the microchip have to do with the satellite ?

anonymous · Answer

bad microchip, satellite is done

anonymous · Answer

we need P(x is less than or equal to 71)

anonymous · Answer

= P(z is less than or equal to the z score)

phi · Answer

71 is 1 month bigger than the mean 70 = 1 month.
sd= 3.1

in terms of z:  1 / 3.1

anonymous · Answer

then you have to multiply that z score by 50,000,000 and that is the answer

anonymous · Answer

so its the z score less than or equal to .322?

anonymous · Answer

no.  the z score is .6293 or .6255

phi · Answer

I get z= 0.32258 which rounds to 0.323

now you need to change the z score to "area under the curve" below z=0.323

phi · Answer

Using the site http://maartendecat.be/home/projects/online-normal-distribution-calculator/ we find

anonymous · Answer

iiiiiiiiii need that website, i just have a chart that doesnt give the exat z score, its between values. life saving.  though i wont be able to use it for my test... :(

anonymous · Answer

thanks for walking through with me.  often i now where i am going i just need someone there to confirm in going in the right direction

phi · Answer

Yes, I was going to say, practice with using the table.  But if you have time, you can use the site to double check your answers.  I am sure if they expect you to use tables they will allow "close" answers.

anonymous · Answer

yea it is all multiple choice so if the options for selection are far apart enough its pretty clear.  thanks again.