# Confidence intervals and hypothesis testing? Maybe?

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A local merchant is interested in obtaining a small business loan to expand his business. He will be able to obtain a more favorable interest rate if he can reasonably demonstrate that his near-term monthly revenues will be between $10,000 and $15,000. He doesn't know the exact level of sales to expect over the next several months, but based on past experience, he knows it should be around $13,000. He also knows that his sales vary by about $2,500 from month to month. What is the probability that his store will generate the revenue required for him to obtain a favorable loan rate?

Use one of the following to address

-Confidence intervals and hypothesis testing

-Decision trees (and their use in solving managerial problems),

-Critical fractile analysis (and its use in determining optimal demand levels),

-Analysis of variance/ANOVA (and its use in understanding differences between group means),

-Chi-square (cross tabs/contingency table) analysis (and its use in determining differences between group proportions),

-Regression, single and multiple (and its use in understanding relationships between dependent and independent (explanatory) variables), and

-Optimization modeling (and its use in determining the best solution given a set of constraint).

How to approach this? Help!!!!!!

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##### Solution Summary

The solution addresses a local merchant is interested in obtaining a small business loan to expand his business. He will be able to obtain a more favorable interest rate if he can reasonably demonstrate that his near-term monthly revenues will be between $10,000 and $15,000. He doesn't know the exact level of sales to expect over the next several months, but based on past experience, he knows it should be around $13,000. He also knows that his sales vary by about $2,500 from month to month. What is the probability that his store will generate the revenue required for him to obtain a favorable loan rate?

Use one of the following to address

-Confidence intervals and hypothesis testing

-Decision trees (and their use in solving managerial problems),

-Critical fractile analysis (and its use in determining optimal demand levels),

-Analysis of variance/ANOVA (and its use in understanding differences between group means),

-Chi-square (cross tabs/contingency table) analysis (and its use in determining differences between group proportions),

-Regression, single and multiple (and its use in understanding relationships between dependent and independent (explanatory) variables), and

-Optimization modeling (and its use in determining the best solution given a set of constraint).

##### Solution Preview

This is a normal distribution problem:

<br>His average revenue is 13000, and standard deviation is 2500

<br>Then we are to find the probability that next ...

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