Please see the attached Word document.
Suppose that a company CEO claims that the average severance package for an employee at his company is $500,000. You decide to test his claim using a significance level of a=0.05. A sample of 55 employees yields a mean of =$485,155 with a sample standard deviation of s=$125,575. First, you set up your hypothesis as follows:
H0: μ = $500,000 (claim)
H1: μ $500,000
Then you compute your sample statistic, and get the following:
Compute the probability of getting a sample statistic at least as extreme as and interpret this probability value.
Round your final answer to two decimal places.
The solution provides step by step method for the calculation of testing of hypothesis. Formula for the calculation and Interpretations of the results are also included. Interactive excel sheet is included. The user can edit the inputs and obtain the complete results for a new set of data.