what will be the variance of the annual cost of maintaining and repairing a car?

Question

A recent study indicates that the annual cost of maintaining and repairing a car in a town in Ontario averages 200 with a variance of 260. If a tax of 10% is introduced on all items associated with the maintenance and repairs of cars, what will be the variance of the annual cost of maintaining and repairing a car?

Answer 1

Multiply the data by a constant increases the variance by the square of the constant.

For a 10% increase means the data is being multiplied by 1.1.

This means the variance will be multiplied by 1.1 * 1.1 = 1.21 and will be 260 * 1.21.