You are considering the purchase of an expensive passive solar heating device which the seller claims will be effective in reducing your monthly home heating expenses.
Before you buy this device, you survey 40 randomly selected homes in your area that have already purchased the device. You ask each homeowner what their monthly heating expenses were before they purchased the device and their monthly heating expenses after the solar heating device was installed.
(a) Perform the appropriate hypothesistest to determine if the use of the passive solar heating device can be attributed to lower monthly heating expenses
Assume a significance level of 2%.
(b) Assume that the solar heating equipment costs $3,000 to buy and install. Using the appropriate98% confidence interval, calculate how many years it will take you to “break even” if you make this investment (ignore the Time Value Of Money)