Over the last 12 years, the hurdle or discount rate for projects from the firm’s research and development division has been 15% three times, 18% five times, and 23% the rest of the time. There is no recognizable pattern. Calculate the probability distribution for next year’s discount rate.
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Over the last 12 years, the hurdle or discount rate for projects from the firm’s research and development division has been 15% three times, 18% five times, and 23% the rest of the time. There is no recognizable pattern. Calculate the probability distribution for next year’s discount rate.
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