solution

 

. Employees sometimes install on their home computers software that was purchased by their employer for use on their work computers. For most commercial software packages, this is illegal. Suppose that 5% of all employees at a large corporation have illegally installed corporate software on their home computers knowing the act is illegal and an additional 2% have installed corporate software on their home computers not realizing that this is illegal. Of the 5% aware that the home installation is illegal, 80% will deny that they knew the act was illegal if confronted by a “software auditor.” If an employee who has illegally installed software at home is confronted and denies knowing it was an illegal act, what is the probability that the employee knew the home installation was illegal?