What is the decision rule for mortgage on a motel

Reference no: EM13138288

A bank holds the mortgage on a motel which the motel owner says has an average daily revenue of at least $2,038. In the event the average is not at least $2,038, the bank will ask the motel owner for additional collateral for the loan as protection against loan default. A loan officer is aware that the daily average revenue is normally distributed and randomly selects 20 days during the last six months. The sample has a mean of $2,001 and standard deviation of $150.00. At the 0.01 level, is the bank loan financially sound (should the bank ask for additional collateral)? What is the decision rule?

Reference no: EM13138288

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