(ii) Determine the product moment correlation coefficient between the adjusted gross income (RM'000) and the reasonable amount of itemized deductions (RM'000). Then, interpret its value. (iii)...

Extracted text: (ii) Determine the product moment correlation coefficient between the adjusted gross income (RM'000) and the reasonable amount of itemized deductions (RM'000). Then, interpret its value. (iii) Determine the coefficient of determination and give a comment on its value. (iv) Construct a linear regression equation for the adjusted gross income (RM°000) and the reasonable amount of itemized deductions (RM'000). By using P-value approach, test the linearity between the adjusted gross income (RM'000) and the reasonable amount of itemized deductions (RM’000). Estimate a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of RM52500. (v) (vi)


Extracted text: 11. To the Internal Revenue Service (IRS), the reasonableness of total itemized deductions depends on the taxpayer's adjusted gross income. Large deductions, which include charity and medical deductions, are more reasonable for taxpayers with large adjusted gross incomes. If a taxpayer claims larger than average itemized deductions for a given level of income, the chances of an IRS audit are increased. Therefore, he has collected seven randomly selected data (RM'000) on adjusted gross income and the average or reasonable amount of itemized deductions (RM°000). The following Microsoft Excel Output depicted the analysis result. SUMMARY OUTPUT Regression Statistics Multiple R 0.9772 R Square 0.9549 Adjusted R Square 0.9458 Standard Error 1.3716 Observations 7 ANOVA df MS F Significance F Regression 199.0083 199.0083 105.7884 0.0001 Residual 9.4060 1.8812 Total 6. 208.4143 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept Adjusted Gross Income 4.6768 1.0334 4.5256 0.0063 2.0203 7.3332 2.0203 7.3332 0.1613 0.0157 10.2854 0.0001 0.1210 0.2016 0.1210 0.2016 (i) Identify the dependent and independent variables involved in this study.