Detailed explanation of confidence interval

Reference no: EM13105884

The Daytona Beach Tourism Commission is interested in the average amount of money a typical college student spends per day during Spring Break. They survey 35 students and find that the mean spending is $63.57 with a standard deviation of $17.32.

a. Develop a 95% confidence interval for the population mean daily spending.

b. Interpret this confidence level.

Forbes has ranked the top 100 most highly compensated executives for 2005 (www.forbes.com). The data for the top 25 are presented below:

Rank Name Total Compensation (millions)

1 Terry Semel 230.6

2 Barry Diller 156.2

3 William McGuire 124.8

4 Howard Solomon 92.1

5 George David 88.7

6 Lew Frankfort 86.5

7 Edwin Crawford 77.9

8 Ray Irani 64.1

9 Angelo Mozilo 57.0

10 Richard Fairbank 56.7

11 C. John Wilder 54.9

12 Richard Kovacevich 53.1

13 Robert Toll 50.2

14 Lawrence Ellison 45.8

15 William Greehey 44.9

16 Irwin Jacobs 44.4

17 Rodney Mott 42.7

18 John Chambers 40.2

19 Richard Fuld Jr. 40.1

20 Bruce Karatz 38.8

21 Jerry Grundhofer 38.6

22 Kevin Rollins 38.5

23 Bob Simpson 38.3

24 Dwight Schar 38.2

25 James Tobin 38.1

Total compensation is all inclusive.

a. Calculate a 95% confidence interval around the mean for executive compensation.

b. Interpret this confidence interval.

c. What factors might limit the conclusions drawn from this sample regarding executive compensation?

Reference no: EM13105884

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