A rent-to-own agreement allows the renter to either return the merchandise after

Question

A rent-to-own agreement allows the renter to either return the merchandise after a specified period of time or apply the monthly payments toward purchasing the item(s) (or clearly, the renter could default on the agreement). A rent-to-own company reports that nationally 61% of the agreements result in the merchandise being returned, 29% of the agreements result in the merchandise being purchased, and the remaining agreements are defaulted on (consumer does not make required payments specified in the contract). At a local rent-to-own company, a sample of 219 agreements finds that 113 result in the merchandise being returned, 78 agreements result in the merchandise being purchased and the remaining agreements are defaulted upon. When testing (at the 5% level of significance) whether the proportions of the local company are different than the proportions nationally, what is the test statistic

Explanation / Answer

null hypothesis: proportion of local comapnies are same as per proportions nationally.

alternate hypothesis:proportion of local comapnies are different then the proportions nationally.

from above chi square test statistic =8.179

observed Expected Chi square Probability O E=total*p =(O-E)^2/E being returned 0.610 113.000 133.59 3.17 being purchased 0.290 78.000 63.51 3.31 defaulted on 0.100 28.000 21.90 1.70 1 219 219 8.1785

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