Question
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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