Each time that Ed Charges an expense to his credit card, he omits the cents and records only the dollar value. If this month he has charged his credit card 20 times what can be said about the probability that the record shows at least $15 less than the actual amount?

Question

Each time that Ed Charges an expense to his credit card, he omits the cents and records only the dollar value.  If this month he has charged his credit card 20 times what can be said about the probability that the record shows at least $15 less than the actual amount?

drwls · Answer

The "cents" part of this billings would have to average 75 or more for that to occur. That is less than 50% likely. The average underestimate is most likely to be 50 cents. One would not not exect a Gaussian distribution, since the probability of 100 cents or more is zero. One would have to add up P(75), P(76)..+ P(99), (for the average underestimate after 20 billings) to get a numerical value.