Most four-year automobile leases allow up to 60,000 miles. If the lessee goes beyond this amount, penalty of 20 cents per mile is added to the lease cost. Assume the distribution of miles driven on four-year leases follow the normal distribution. The mean is 52,000 miles and the standard deviation is 5,000 miles.
a. What percent of leases will yield penalty because of excess mileage?
b. If the automobile company wanted to change term of lease so that 25% of the leases went over the limit, where should the new upper limit be set?
b. One definition of low-mileage car is one that is 4 years old and has been driven less than 45,000 miles. What percentage of are returned are considered low mileage?