Homework answers / question archive / Question 1: Referring to the Confusion Matrix, apply the Predictive Model to Via Rails 2018 in train passenger injury data

Question 1: Referring to the Confusion Matrix, apply the Predictive Model to Via Rails 2018 in train passenger injury data

Writing

Share With

---

Question 1: Referring to the Confusion Matrix, apply the Predictive Model to Via Rails 2018 in train passenger injury data. In 2018, 4,390,000 passengers travelled on Via Rail trains and 1,600 were injured.

How often did the model correctly and incorrectly predict for each passenger “yes, will have an accident” or “no, will not have an accident”?

Predicted No + Predicted Yes = Total

(4,390,000)

Actual No 4,388,000 400 4,388,400

Actual Yes 620 980 1,600

a. Identify:

i. the True Positives:

ii. the True Negatives:

iii. the False Positives:

iv. The False Negatives:

b. Calculate the Accuracy:

c. Calculate the Precision:

d. Calculate the Recall:

e. Calculate the F-score:

Question 2: The Railway Association is considering the purchase of sensors to connect to various mapping technologies. The sensors, which could be purchased for $300 each, can be expected to have a useful life of seven years, with no salvage value. If the Railway Association management wishes to earn an annual after tax, time adjusted rate of return of at least 6% on its funds, compute the minimum after-tax cash flow that each sensor would have to generate to attain this rate of return. (For 6%, 7 years, the present value factor is 5.582).

Question 3 (A and B): The new decals would cost $15,000 per location or $2,955,000 for all 197 locations and will result in an annual return of $985,000 due to a decrease in liability claims. The decals have no salvage value at the end of their seven (7) year life span. The income tax rate is 40 percent.

A. Determine whether the decals will have a positive net present value if the minimum acceptable

rate of return is 10 percent per year compounded annually? (Factor = 4.868)

B. The Risk Manager had some difficulty in convincing the executive officers of the $985,000

savings which in turn could be viewed as additional annual revenue. If the following probability distribution applied to each year's additional revenue and the executive officers wanted to make its decisions on the basis of the expected value of this additional revenue, should they invest in the decals?

Probability

%

Additional Savings/Revenue

$

.10 750,000

.35 985,000

.25 1,025,000

.15 1,200,000

.10 1,350,000

.05 1,700,000