An appraiser is appraising an office building in Manhattan.Assume that the population of these appraisals is normallydistributed. For commercial appraisals, a comparison analysis and acost analysis is done. A comparison analysis involves finding thesale prices of several comparable properties (within the last sixmonths) and computing an average value. The cost method involvesdetermining the present cost of duplicating the given property.Clearly, if the comparable analysis yields a present market pricegreater than the cost of duplicating the given property, the priceis not a good deal to an investor, and vice versa. Using thecomparison analysis method, the appraiser collected sales data onnine comparable buildings, yielding values of $111,520,000,$112,460,000, $111,940,000, $112,601,000, $110,980,000,$111,200,000, $112,750,000, $112,400,000, and $111,680,000. Usingthe cost approach, the appraisal was $112,525,000. At the 5% levelof significance, should the appraiser conclude that the twoappraisals are the same or different?

Step 1 of 4: Consider the problem scenario. Themean of the comparable properties is $111,948,000. What are thelogical hypotheses? Use a significance level of 5%.

A) H₀:?  ?  $112,525,000H_a: ? > $112,525,000

B) H₀: ? = $112,525,000 H_a: ? ?$112,525,000

C) H₀: ? ? $112,525,000 H_a: ? =$112,525,000

D) H₀: ? ?  $112,525,000H_a: ? <  $112,525,000

Step 2 of 4: What is the classical approachdecision rule for the null hypothesis?

A) If | t |  <  1.860, rejectthe null hypothesis.

B) If t  >  1.860, reject thenull hypothesis.

C) If t  <  -1.860, reject thenull hypothesis.

D) If | t |  >  1.860, rejectthe null hypothesis.

Step 3 of 4: Using the classical approach,state the conclusion of the test.

A) It is a certainty that the comparison appraisal is less thanthe cost appraisal.

B) At the 5% level, fail to reject the null hypothesis; there isnot sufficient sample evidence to claim that the comparisonappraisal is less than the cost appraisal.

C) At the 5% level, reject the null hypothesis; there issufficient sample evidence to conclude that the comparisonappraisal is less than the comparison appraisal is less than thecost appraisal.

D) At the 5% level, the results are inconclusive.

Step 4 of 4: Using the p-value approach, statethe conclusion of the test.

A) Since the p-value of 0.000 is less than the statedsignificance level of 0.05, the test is inconclusive.

B) Since the p-value of 0.100 is not less than the statedsignificance level of 0.05, fail to reject the null hypothesis

C) Since the p-value of 0.027 is less than the statedsignificance level of 0.05, fail to reject the null hypothesis

D) Since the p-value of 0.014 is less than the statedsignificance level of 0.05, reject the null hypothesis