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You pay off your credit card balance every month to earn the 2% cash-back reward and avoid 12-28% interest Your EXPECTED values are the amounts

  • You pay off your credit card balance every month to earn the 2% "cash-back" reward and avoid 12-28% interest
  • Your EXPECTED values are the amounts you budgeted the year before for this current year.
  • The OBSERVED values are the amounts you actually charged each month this year.
  • The monthly differences are due to vacations, holidays, birthdays, auto repairs, medical, and other unusual expenses.

a) State your null hypothesis, Ho: ________________ and alternate hypothesis, Ha: __________________

Assume a 5% significance level (alpha )

b) What are the degrees of freedom (k - 1) in this problem? _____,

c) What is the X2 Critical value? ________

d) Fill in the Table below to calculate your X2 Test value:__________

e) Is the test statistic greater or less than the critical value, so do you accept or reject Ho? _______

Real world interpretation?_______________________________

f) From software what is the p-value and is it less or greater than our of 5% ? [should agree with (e) ]

MONTH BUDGETED ($) ACTUAL ($) (E - O)2 / E
JAN 1500 1490
FEB 900 880
MAR 600 550
APR 1000 950
MAY 800 850
JUN 800 800
JUL 1500 1450
AUG 1500 1500
SEP 1000 975
OCT 800 750
NOV 1100 1100
DEC 2300 2350

Total is

X2 Test >

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