I need some direction with this math assignment.
Armed Forces Credit Union would like to examine the required sample size needed to be able to estimate the mean dollars that each card holder will spend each month. It would like to be within plus or minus $10 of the true mean with a 98% confidence level. The standard deviation is thought to be $500. How many card holders should be sampled?
After you have determined how many card holders should be sampled, Armed Forces Credit Union comes back and says that it will cost $5 per sample, and it was only planning on spending $10,000 on the sample. In a memo to the Armed Forces Credit Union product development team, indicate how many card holders should be sampled to meet the original requirements of the sample. Explain the trade-offs that will occur when you lower the sample to $10,000 to meet the budget.
Assignment Guidelines:
· Indicate how many card holders should be sampled to meet the original sample requirements of plus or minus $10 of the true mean with a 98% confidence level.
· Determine the new standard deviation and confidence intervals using the budget limit of $10,000.
o Be sure to show all work for your calculations.
· Address the following in 1,250–2,000 words:
o Explain the trade-offs that will occur when you lower the sample size to satisfy the $10,000 budget limit.
· Add your calculations and your work to the Word document.
· Save the file, and submit it to your instructor.
Please submit your assignment.
I came up with this:
Desire Cruz This is what I came up with but I am probably way off.
twenty samples at 500=20,000 (budget)
take the mean and square it this is then the standard deviation. 98% converts to .98= confidence level which converts to .02 Am I on the right track so far?