While i can understand the overall logic, I have a question regarding the ratio. If our numerator is calculated as 30% of 5/4 Act Total, shouldn't my denominator by default be 5/4 act. I can't realistically have 5/6 as my actual Total and my Act Tut calculated as 30% of some other cost i.e 5/4 Act, since Act Tut is a function of Act Total.
All I know is the estimate of tutoring is 30 and estimate of total is 100. The actual values could vary anywhere from 25 to 37.5 for tutoring income (numerator) and 83.33 to 120 for total income (denominator). Nothing says that if I am, say, overestimating the tutoring income, I must overestimate the total income also in the same proportion etc. I may have grossly underestimated income from other sources. All I know are estimates. They are calculated independently, as far as we know.
I thought if error is less than 20%, then the estimate tutoring income could vary from 24 to 36 (if estimate value before error is 30), whereas total income could vary from 80 to 120. Could you please help, where I am wrong?
While i can understand the overall logic, I have a question regarding the ratio. If our numerator is calculated as 30% of 5/4 Act Total, shouldn't my denominator by default be 5/4 act. I can't realistically have 5/6 as my actual Total and my Act Tut calculated as 30% of some other cost i.e 5/4 Act, since Act Tut is a function of Act Total.
All I know is the estimate of tutoring is 30 and estimate of total is 100. The actual values could vary anywhere from 25 to 37.5 for tutoring income (numerator) and 83.33 to 120 for total income (denominator). Nothing says that if I am, say, overestimating the tutoring income, I must overestimate the total income also in the same proportion etc. I may have grossly underestimated income from other sources. All I know are estimates. They are calculated independently, as far as we know.
@karishma.anaprep this really helps. Thanks a lot.
I thought if error is less than 20%, then the estimate tutoring income could vary from 24 to 36 (if estimate value before error is 30), whereas total income could vary from 80 to 120. Could you please help, where I am wrong?
@@ayazyakupov1216 The estimation error has actual value as the base, not the estimated value. That is why we do what we have done here.