Willco is a manufacturer in a mature cyclical industry. During the most recent industry cycle, its net income averaged $30 million per year with a sampled standard deviation of $10 million. There are altogether 6 observations. Management claims that Willco’s performance during the most recent cycle results from new approaches and that we can dismiss profitability expectations based on its net income expectation of $24 million per year.

With μ as the population mean of the annual net income (during the most recent cycle results from new approaches), formulate the null and the alternative hypotheses consistent with testing Willco management’s claim. 

 Explain why it has to be two-tailed hypothesis test?

Answer rating: 100% (QA)

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