All Well insurance has the opportunity to purchase 6,780-person customer base from Drive Right insurance. Based on previous acquisitions, All Well believes that if 70% or more of the customers will make the switch, then the deal is favorable to All Well. However, if 60% or less make the move to All Well, then the deal is poor. A research analysis is conducted where a random sample of 20 Drive Right customers are selected and asked if they will be willing to switch insurance companies. This research suggests that if 15 or more of the 20 sampled customers say they will switch then All Well should go ahead with the purchase. What is the probability that the sample plan will provide a result that suggest that All Well should reject the deal even if the true proportion of all customers who switch is actually 0.70.
All Well insurance has the opportunity to purchase 6,780-person customer base from Drive Right insurance. Based on previous acquisitions, All Well believes that if 70% or more of the customers will make the switch, then the deal is favorable to All Well. However, if 60% or less make the move to All Well, then the deal is poor. A research analysis is conducted where a random sample of 20 Drive Right customers are selected and asked if they will be willing to switch insurance companies. This research suggests that if 15 or more of the 20 sampled customers say they will switch then All Well should go ahead with the purchase.
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