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Q. Howard Davis invests $10,000 in a certain stock on January 1, 2003. By examining past movements of this stock and consulting with his broker, hoard estimates which the annual return from this stock, X, is normally distributed with mean 10% and standard deviation 4%. Here X (when expressed as a decimal) is the profit Howard receives per dollar invested. It means which on December 31, 2003, his $10,000 will have grown to 10,000(1 + X) dollars. Because Howard is in the 33% tax bracket, he will then have to pay the Internal Revenue Service 33% of his profit.
Calculate the probability which Explain Howard will have to pay the IRS at least $400.
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