In a random sample of 49 audited estate tax returns, it was determined that the mean amount of additional tax owed was $3412 with a standard deviation of 2564.
Construct and interpret a 90% confidence interval for the mean additional amount of tax owed for estate tax returns.
t critical value at 0.10 significance level with 48 df = 1.677
90% confidence interval for
is
- t * S / sqrt(n) <
<
+ t * S / sqrt(n)
3412 - 1.677 * 2564 / sqrt(49) <
< 3412 + 1.677 * 2564 / sqrt(49)
2798 <
< 4026
90% CI is ( $2798 , $4026 )
Interpretation = WE are 90% confident that mean additional amount of tax owed for estate tax return is
between $2798 and $4026
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