Q. 3. Consider the sample of 850 past negligence cases. Suppose you are willing to let the 75% estimate be within .03 (3%) of the true proportion. You are willing to assume a 95% confidence A) Is 850 an adequate sample size for the estimate of 75%? Show why or why not. B) Construct a 95% confidence interval on the estimate of 75%. How would you interpret it?

Q. 4. Determine the expected value of the amount that could be paid to Louis Matthew in a settlement. Use the 75% probability figure. Also, determine a maximum and minimum expected value for the settlement figure based on the confidence interval above. Be sure to include all of the damages Louis Matthew will be able to recover. How would you interpret your expected values?

Q. 5. Should Mary Silver attempt to settle the matter with Louis Matthew before he files a lawsuit? If so, what would be the recommended monetary amount of the settlement? Be sure to include all of the statistical and legal issues involved as well as any strategic and ethical issues.

After reading the letter from Thomas, Matthew responded by sending the letter shown in Exhibit 2. After receiving the second letter from Matthew, Thomas contacted Mary Silver, the director of the risk management department at corporate headquarters. Following their short conversation, she said that she would look into the matter. Mary Silver was aware of the results of a recent survey of 850 past negligence cases in the State of Gould. In 75% of these cases, the plaintiff was awarded damages. On average the amount awarded was approximately 50% of the amount requested by the plaintiff, excluding punitive damages, which were not included in the study. Mary Silver, on behalf of ASCS, is contemplating settling this case out of court and has asked your legal team to write a report. She is seeking your legal and statistical evaluation of the problems facing ASCS. December 26, 2014 All Star Computer Services, Inc. c/o Mr. Lawrence Thomas Electronic Repair Department 123 M Street Chester, Gould 41413 Dear Mr. Thomas: I understand you position regarding backing up my computer hard drive. I had instructed my son numerous times to do this for me and he would tell me "sure Dad, no problem, I will do that first thing tomorrow." Unfortunately, first thing tomorrow never came for me or my son. Nevertheless, I am confident that, if you had returned my "crashed" hard drive to me, Mr. Isaac would have been able to recover the materials from my hard drive. Your offer of a $100 gift certificate is appreciated but is wholly inadequate as a settlement in this case. I would make the following proposal to All Star Computer Services: 1. A payment of $800 as reimbursement for the unnecessary expenditure to Mr. Isaac; 2. A payment of $5,000 to cover the cost of my time to reconstruct lost materials used in my consulting job; 3. A payment of $10,000 in the form of punitive damages for your behavior in the handling of this matter. Sincerely, Louis Matthere Louis Matthew