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Confidence interval for the mean

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A price-earnings ratio or P/E ratio is calculated as a firm's share price compared to the income or profit earned by the firm per share. Generally, a high P/E ratio suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E ratio. The following table shows the P/E ratios for a sample of firms in the footwear industry.

Firm                                   P/E Ratio

Brown Show Co., Inc.          26

Crocs, Inc.                            13

DSW, Inc                               21

Foot Locker, Inc.                  16

Nike, Inc                                21

Let these ratios represent a random sample drawn from a normally distributed population.

Construct the 90% confidence interval for the mean P/E ratio for the entire footwear industry.

(round intermediate calculations to 4 decimal places. Round "t" value to 3 decimal places and final answers to 1 decimal place)

Reference no: EM131402609

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