Question

7. According to a national survey of small employers (less than 200 employees) by a major actuarial firm, 18% plan to drop health insurance coverage as an employee benefit within the next year. There are 40 small employers within the market service area for General Hospital. Use the BINOM.DIST function in Excel to answer these questions: a) What is the probability that at most 5 of the small employers will drop health insurance benefits? b) What is the probability that more than 10 of the small employers will drop health insurance benefits?

Answer 1

7)

Answer)

Formula for binomial excel function is

=BINOM.DIST(number_s,trials,probability_s,cumulative)

Where number_s = number of success required

Trials = number of trials

Probability = probability in single trial

Cumulative

False for exactly

True for at most

A)

N = 40 (trials)

Probability = 0.18

Number_s = 5

Cumulative = TRUE

After substitution

Probability is 0.24963216261 = 0.2496

B)

As the sum of all the probabilities is = 1

We will first find p(at most 10) then will subtract it from 1 to get more than 10

After substitution

Probability is 0.09163395068