Question

Your firm's accountant believes that 10% of the company's invoices contain arithmetic errors. To check this theory, the accountant randomly samples 25 invoices and finds that seven contain errors.

a) What is the probability that of the 25 invoices written, seven or more would contain errors if the accountant's theory was valid?

b) What assumptions do you have to make to solve this problem?

c) Determine if the assumptions you made in (b) can be verified. EXPLAIN.

Answer 1

p= 0.10

n = 25

b)

I) Probability of success is constant for all draws

ii) all draws are independent of each other

x)

no as we don't have the probability of two event simultaneously