According to flyer by a Prudential Insurance Company representative, the costs of approximate probate fees and taxes for selected net taxable estates are as follows:
Net Taxable Estate ($)
Approximate Probate Fees and Taxes ($)
600,000
30,000
750,000
92,500
1,000,000
203,000
1,500,000
438,000
2,000,000
688,000
2,500,000
1,037,000
3,000,000
1,350,000
Decide which variable should be the independent variable and which should be the dependent variable.
Make a scatter plot of the data.
Does it appear from inspection that there is a relationship between the variables? Why or why not?
Calculate the least squares line. Put the equation in the form of:
Find the correlation coefficient. Is it significant?
Find the estimated total cost for a net taxable estate of $1,000,000. Find the cost for $2,500,000.
Use the two points in (f) to plot the least squares line on your graph from (b).
Does it appear that a line is the best way to fit the data? Why or why not?
Are there any outliers in the above data?
Based on the above, what would be the probate fees and taxes for an estate that does not have any assets?
What is the slope of the least squares (best-fit) line? Interpret the slope.
Yes
0.9964; Yes
$208,875.35; $1,028,325.35
Yes
No
slope = 0.5463. As the net taxable estate increases by one dollar, the approximate probate fees and taxes tend to increase by 0.5463 dollars (about 55 cents).
