16
QuizMultiple Choice

Probability in the Business Setting

Question 16 • FowU - Financial Math - B

A city keeps track of the number of new small businesses which open in any given year, as well as how many of those new businesses report profit in excess of their initial investment after one year’s time. An example of the data collected can be viewed in the table below.Year19981999200020012002New781699626730762Profitable311205217264244If 684 new small businesses opened in 2003, approximately how many of them could be expected to turn a profit in excess of their initial investment by 2004?

Answer
A
200
B
236
C
247
D
272

Explanation

Estimate the overall fraction of new businesses that became profitable by combining the five years of data: 1,241 profitable businesses out of 3,598 new businesses, or about 34.5%. Applying that rate to 684 new businesses gives 684 × 0.345 ≈ 236. So approximately 236 businesses could be expected to turn a profit in excess of their initial investment; this is choice B.

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