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Normal Probability: Lifetime of Participants in an Annuity Plan

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A company that sells annuities must base the annual payout on the probability distribution of the length of life of the participants in the plan. Suppose the probability distribution of the lifetimes of the participants is approximately a normal distribution with a mean of 68 years and a standard deviation of 3.5 years.

A random sample of 36 participants is taken. What is the probability the mean age of plan participants would receive payments beyond age 73?

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Solution Summary

The solution provides step-by-step method for the calculation of probability using the Z score. Formula for the calculation and interpretations of the results are also included in the attached Word and Excel documents.

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