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Data given below are on the adjusted gross income and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation ŷ = 4.68 +0.16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52,500 is $13,080. Click on the datafile to reference the data. Excel File: data14-37.xlsx Adjusted Gross Income ($1000s) 22 N 27 Reasonable Amount of Itemized Deductions ($1000s) 9.6 9.6

Data given below are on the adjusted gross income and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation ŷ = 4.68 +0.16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52,500 is $13,080. Click on the datafile to reference the data. Excel File: data14-37.xlsx Adjusted Gross Income ($1000s) 22 N 27 Reasonable Amount of Itemized Deductions ($1000s) 9.6 9.6

Functions and Change: A Modeling Approach to College Algebra (MindTap Course List)
Functions and Change: A Modeling Approach to College Algebra (MindTap Course List)
6th Edition
ISBN:9781337111348
Author:Bruce Crauder, Benny Evans, Alan Noell
Publisher:Bruce Crauder, Benny Evans, Alan Noell
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Data given below are on the adjusted gross income and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation = 4.68 +0.16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52,500 is $13,080. Click on the datafile to reference the data. Excel File: data14-37.xlsx Adjusted Gross Income ($1000s) 22 27 32 48 65 85 120 Reasonable Amount of Itemized Deductions ($1000s) Use the estimated regression coefficients rounded to 2 decimals in your calculations. a. Develop a 95% confidence interval for the mean amount of total itemized deductions for all taxpayers with an adjusted gross income of $52,500 (to 2 decimals). Any deductions exceeding the $ 9.6 9.6 10.1 11.1 13.5 17.7 25.5 $9.2739 thousand to $ 16.886 thousand b. Develop a 95% prediction interval estimate for the amount of total itemized deductions for a particular taxpayer with an adjusted gross income of $52,500 (to 2 decimals). thousand $ thousand to $ c. If the particular taxpayer referred to in part (b) claimed total itemized deductions of $20,400, would the IRS agent's request for an audit appear to be justified? Select your answer - V it is Select your answer - than anticipated. d. Use your answer to part (b) to give the IRS agent a guideline as to the amount of total itemized deductions a taxpayer with an adjusted gross income of $52,500 should claim before an audit is recommended (to the nearest whole number). upper limit could suggest an audit.
Transcribed Image Text:Data given below are on the adjusted gross income and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation = 4.68 +0.16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52,500 is $13,080. Click on the datafile to reference the data. Excel File: data14-37.xlsx Adjusted Gross Income ($1000s) 22 27 32 48 65 85 120 Reasonable Amount of Itemized Deductions ($1000s) Use the estimated regression coefficients rounded to 2 decimals in your calculations. a. Develop a 95% confidence interval for the mean amount of total itemized deductions for all taxpayers with an adjusted gross income of $52,500 (to 2 decimals). Any deductions exceeding the $ 9.6 9.6 10.1 11.1 13.5 17.7 25.5 $9.2739 thousand to $ 16.886 thousand b. Develop a 95% prediction interval estimate for the amount of total itemized deductions for a particular taxpayer with an adjusted gross income of $52,500 (to 2 decimals). thousand $ thousand to $ c. If the particular taxpayer referred to in part (b) claimed total itemized deductions of $20,400, would the IRS agent's request for an audit appear to be justified? Select your answer - V it is Select your answer - than anticipated. d. Use your answer to part (b) to give the IRS agent a guideline as to the amount of total itemized deductions a taxpayer with an adjusted gross income of $52,500 should claim before an audit is recommended (to the nearest whole number). upper limit could suggest an audit.
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