An investigator analyzed the leading digits from 794 checks issued by seven suspect companies. The frequencies were found to be 218, 130, 106, 83, 65, 48, 48, 37, and 59, and those digits correspond to the leading digits of 1, 2, 3, 4, 5, 6, 7, 8, and 9, respectively. If the observed frequencies are substantially different from the frequencies expected with Benford's law shown below, the check amounts appear to result from fraud. Use a 0.025 significance level to test for goodness-of-fit with Benford's law. Does it appear that the checks are the result of fraud?
Leading_Digit Actual_Frequency Benford's_Law:
1) 218 30.10%
2 )130 17.60%
3) 106 12.50%
4) 83 9.70%
5) 65 7.90%
6) 48 6.70%
7) 48 5.80%
8) 37 5.10%
9) 59 4.60%
Calculate the test statistic, χ2 =? (Round to three decimal places as needed.)
Calculate the P-value=? (Round to four decimal places as needed.)
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