A small company’s financial officer believes that 20%

claims will be more than 15 days overdue in the next two months’ claims.

a) How many randomly selected claims must he contact in order to create an estimate in which he has 90% confident with a margin of error of 8%?

b) Suppose, he wants to reduce the margin of error to 4%.

What sample size will suffice?

c) What is the sample size if he reduces the margin of error to 2%? Is this reasonable? Explain.