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Assisted-Living Facility Rent. Costs are rising for all kinds of medical care. The mean monthly rent at assisted-living facilities was reported to have increased 17% over the last five years to $3486. Assume this cost estimate is based on a sample of 120 facilities and, from past studies, it can be assumed that the population standard deviation is .

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Assisted-Living Facility Rent.Costs are rising for all kinds of medical care. The mean monthly rent at assisted-living facilities was reported to have increased 17% over the last five years to $3486 (the Wall Street Journal, October 27, 2012). Assume this cost estimate is based on a sample of 120 facilities and, from past studies, it can be assumed that the population standard deviation is s = $650. a. Develop a 90% confidence interval estimate of the population mean monthly rent.

Answer:

[tex]CI: 3388.39<X<3583.61[/tex]

Step-by-step explanation:

Sample Size n=120

Mean \=x =3486

Standard Deviation \sigma=650

Confidence interval CI=0.9

Therefore

Level of sig [tex]\alpha=0.1[/tex]

Therfore

The Critical Value from table is

Z_c=1.645

Generally the equation for Standard error is mathematically given by

[tex]S.E=\frac{\sigma}{\sqrt{n}}[/tex]

[tex]S.E=\frac{650}{\sqrt{120}}[/tex]

[tex]S.E=59.3366[/tex]

Generally the equation for Margin error is mathematically given by

[tex]M.E= = Z_c * SE[/tex]

[tex]M.E=1.65 * 59.34[/tex]

[tex]M.E= 97.61[/tex]

Therefore

[tex]CI= \=x \pm M.E[/tex]

[tex]CI= 3486 \pm 97.61[/tex]

Lower limit

[tex]LL= \=x-M.E=3486-97.6087[/tex]

[tex]LL= 3388.39[/tex]

Upper limit:

[tex]UL= \=x+E=3486+97.6087[/tex]

[tex]UL= 3583.61[/tex]

Therefore The  90% confidence interval estimate of the population mean monthly rent.

[tex]CI: 3388.39<X<3583.61[/tex]

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