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Hypothesis Testing: Proportion of tax payers

It has been reported that 80% of taxpayers who are audited by the Internal Reve-
nue Service end up paying more money in taxes. Assume that auditors are random-
ly assigned to cases, and that one of the ways the IRS oversees its auditors is to
monitor the percentage of cases that result in the taxpayer paying more taxes. If
a sample of 400 cases handled by an individual auditor has 77.0% of those she
audited paying more taxes , is there reason to believe her overall "pay more" per-
centage might be some value other than 80%? Use the 0.10 level of significance
in reaching a conclusion. Determine and interpret the p-value for the test.

NOTE: Please use an Excel spreadsheet for response. Please do not just provide
the answers but show in complete detail how you arrived at the answers, step-by-
step, from the beginning to the end of the solution.

Solution Summary

The solution provides step by step method for the calculation of testing of hypothesis. Formula for the calculation and Interpretations of the results are also included. Interactive excel sheet is included. The user can edit the inputs and obtain the complete results for a new set of data.