Question

A recent study showed that for estates worth less than $6 million, about 1 out of 6 of all estate tax returns are audited, but that probability increases to 60% for estates worth over $6 million. Suppose a tax accountant has three clients who have recently filed returns for estates worth more than $6 million. What are the probabilities that: a) All three will be audited? b) None will be audited? c) At least one will be audited? d) What did you assume in calculating these probabilities? a) The probability that all three will be audited is 17 (Do not round.) b) The probability that none will be audited is (Do not round.) . c) The probability that at least one will be audited is (Do not round.) d) What did you assume in calculating these probabilites? O O Disjoint events Independent events

Answer 1

p = 0.6
n = 3

a)
P(all three audited) = 0.6^3 = 0.216

b)
P(none is audited) = (1-0.6)^3 = 0.064

c)
P(at least 1 is audited) = 1 - 0.064 = 0.936

d)
independent events