An insurance company is reviewing its current policy rates. When originally setting the rates they believed that the average claim amount was $1,800. Now there are concerns that if the true mean is actually higher than this they could potentially lose a lot of money. They randomly select 40 claims, and calculate a sample mean of $1,950. Assuming that the standard deviation of claims is $500, and set significance level = :05, test to see if the insurance company should be concerned.
Show all of your work and clearly label each of your calculations. Share your calculations from Excel and your interpretations of your findings in your Word document.