After a hailstorm, a large car dealership wants to determine the proportion of cars that have damage. The service department randomly selects 50 cars on the dealership lot, examines them, and determines that 18 have damage. Assuming all conditions have been met, they construct a [tex]$99 \%$[/tex] confidence interval for the true proportion of cars with damage from the storm.

What are the calculations for this interval?

A. [tex]$0.36 \pm 2.58 \sqrt{\frac{0.36(1-.36)}{50}}$[/tex]
B. [tex]$0.64 \pm 2.33 \sqrt{\frac{0.64(1-0.64)}{50}}$[/tex]
C. [tex]$0.36 \pm 2.33 \sqrt{\frac{0.36(1-0.36)}{50}}$[/tex]
D. [tex]$0.64 \pm 2.58 \sqrt{\frac{0.64(1-0.64)}{50}}$[/tex]



Answer :

To calculate the [tex]\(99\%\)[/tex] confidence interval for the true proportion of cars with damage from the storm, we need to follow these steps:

1. Determine the sample proportion [tex]\( \hat{p} \)[/tex]:
[tex]\[ \hat{p} = \frac{\text{number of damaged cars}}{\text{total sample size}} = \frac{18}{50} = 0.36 \][/tex]

2. Identify the z-value corresponding to the confidence level:
For a [tex]\(99\%\)[/tex] confidence level, the z-value is [tex]\(2.58\)[/tex].

3. Calculate the standard error [tex]\( SE \)[/tex]:
[tex]\[ SE = \sqrt{\frac{\hat{p}(1 - \hat{p})}{n}} = \sqrt{\frac{0.36 \times (1 - 0.36)}{50}} \approx 0.06788225099390856 \][/tex]

4. Calculate the margin of error (MOE):
[tex]\[ MOE = z \times SE = 2.58 \times 0.06788225099390856 \approx 0.17513620756428408 \][/tex]

5. Construct the confidence interval:
[tex]\[ \text{Lower bound} = \hat{p} - MOE = 0.36 - 0.17513620756428408 \approx 0.1848637924357159 \][/tex]
[tex]\[ \text{Upper bound} = \hat{p} + MOE = 0.36 + 0.17513620756428408 \approx 0.535136207564284 \][/tex]

Therefore, the [tex]\(99\%\)[/tex] confidence interval for the true proportion of cars with damage is approximately [tex]\((0.1849, 0.5351)\)[/tex].

Among the given options, the one that matches our calculation for a [tex]\(99\%\)[/tex] confidence interval is:
[tex]\[ 0.36 \pm 2.58 \sqrt{\frac{0.36(1 - 0.36)}{50}} \][/tex]

This is the correct answer.