The data on profit and market capitalization for a sample of 15 different firms in the Philippines are as below.

Profits (Php millions) y Market Capitalization ($ millions) x

296.2 1936.9
-25 1171.8
4085 55135.8
6558 97417.2
12525 95198.9
3394 53579.7
442.8 12466.3
633.1 8894.3
3528 65872.4
2698 25661.3
1200.65 19854.7
11.987 195643.8
641.8 10447.8
5043 66695.5
5206 53558.4

a. Develop a scatter chart for the above data. What does this chart indicate about the relationship between market capitalizati

Profits per Market Capitalization

14000

12000

10000
Market Capitalization

8000

6000

4000

2000

0
0 50000 100000 150000 200000 25
-2000
Profit

b. Use the data to develop an estimated regression equation that could be used to estimate a firm’s profit based on its market
y(hat)=b0+b1X 3082.57 = 1916.49 + (0.02 * 50902.32)
 x(hat)= 50902.32
y(hat)= 3082.57
b1= 0.02
b0= 1916.49

c. What is the predicted profit for the market capitalization of 70721.3 (Php million)?
y= 1916.49 + (0.02 * 70721.3)
3536.59

The predicted profit for the market capitalization of 70721.3 Million is 3536.59 Million
lippines are as below.

Market Capitalization ($ millions) x Profits (Php millions) y x-x(hat) y-y (hat)

1936.9 296.2 -48965.42 -2786.37
1171.8 -25 -49730.52 -3107.57
55135.8 4085 4233.48 1002.43
97417.2 6558 46514.88 3475.43
95198.9 12525 44296.58 9442.43
53579.7 3394 2677.38 311.43
12466.3 442.8 -38436.02 -2639.77
8894.3 633.1 -42008.02 -2449.47
65872.4 3528 14970.08 445.43
25661.3 2698 -25241.02 -384.57
19854.7 1200.65 -31047.62 -1881.92
195643.8 11.987 144741.48 -3070.58
10447.8 641.8 -40454.52 -2440.77
66695.5 5043 15793.18 1960.43
53558.4 5206 2656.08 2123.43
50902.32 3082.56913333333

elationship between market capitalization and profit?

ization

000 200000 250000

mate a firm’s profit based on its market capitalization. What is the estimated regression model?
70721.3 Million is 3536.59 Million
 (x-x(hat))^2 (x-x(hat))(y-y(hat)) Market Capitalization ($ millions) x
2397612355.78 136435734.89 1936.9
2473124619.47 154541028.94 1171.8
17922352.91 4243771.03 55135.8
2163634061.41 161659249.71 97417.2
1962186999.70 418267394.28 95198.9
7168363.66 833818.77 53579.7
1477327633.44 101462219.20 12466.3
1764673744.32 102897348.34 8894.3
224103295.21 6668135.71 65872.4
637109090.64 9706917.19 25661.3
963954707.66 58429110.12 19854.7
20950096032.59 -444440602.44 195643.8
1636568188.43 98740143.72 10447.8
249424534.51 30961437.55 66695.5
7054760.97 5640002.26 53558.4
36931960740.7 846045709.26976
Profits (Php millions) y y = 1916.49 + 0.02x error
296.2 1960.86 2257.06
-25 1943.33 1918.33
4085 3179.55 7264.55
6558 4148.14 10706.14
12525 4097.33 16622.33
3394 3143.90 6537.90
442.8 2202.07 2644.87
633.1 2120.24 2753.34
3528 3425.51 6953.51
2698 2504.34 5202.34
1200.65 2371.32 3571.97
11.987 6398.34 6410.33
641.8 2155.83 2797.63
5043 3444.36 8487.36
5206 3143.42 8349.42
A survey is conducted to determine whether the age of car influences the annual maintenance cost. A sample of 10 cars is sele

Age of car (months) x Annual Maintenance Cost ($) y Age of car (months) x
3 120 3
5 115 5
6 135 6
7 290 7
9 275 9
10 300 10
11 350 11
13 475 13
14 500 14
15 550 15
9.3

a. Develop a scatter chart for these data with age of cars as the independent variable. What does the scatter chart indicate ab

Annual Maintenance Cost per Car Age in Months

600

500
Annual Maintenance Cost

400

300

200

100

0
2 4 6 8 10 12 14 1
Age of car (months)

b. Use the data to develop an estimated regression equation that could be used to predict the annual maintenance cost given
y(hat)=b0+b1X 311 = -45.60 + (38.34 * 9.3)
x(hat)= 9.3
y(hat)= 311
b1= 38.34
b0= -45.60

c. What is the predicted annual maintenance cost for a 24 months old car?
y= -45.6 + (38.34*24)
874.65
The predicted annual maintenance cost for a 24 mos old car is 874.65
 cost. A sample of 10 cars is selected and the data is shown below.

Annual Maintenance Cost ($) y x-x(hat) y-y (hat) (x-x(hat))^2 (x-x(hat))(y-y(hat))

120 -6.3 -191 39.69 1203.3
115 -4.3 -196 18.49 842.8
135 -3.3 -176 10.89 580.8
290 -2.3 -21 5.29 48.3
275 -0.3 -36 0.09 10.8
300 0.7 -11 0.49 -7.69999999999999
350 1.7 39 2.89 66.3
475 3.7 164 13.69 606.8
500 4.7 189 22.09 888.3
550 5.7 239 32.49 1362.3
311 146.1 5602

oes the scatter chart indicate about the relationship between age of a car and the annual maintenance cost?

e in Months

12 14 16

annual maintenance cost given the age of the car. What is the estimated regression model?
Age of car (months) x Annual Maintenance Cost ($) y y = -45.60 + 38.34x
3 120 69.44
5 115 146.12
6 135 184.47
7 290 222.81
9 275 299.50
10 300 337.84
11 350 376.18
13 475 452.87
14 500 491.21
15 550 529.56
error
-50.56
31.12
49.47
-67.19
24.50
37.84
26.18
-22.13
-8.79
-20.44
A researcher wanted to study effect of two factors, x1 and x2, on yield (y). The observations are given below.

Observations x1 x2 y
1 42.5 30.1 260.4
2 43.5 29.3 261.7
3 43.9 31.1 273.6
4 44.8 29.6 278.6
5 46.8 29.7 281.5
6 47.5 29.9 294.6
7 50.1 30.1 301.2
8 51.9 30.4 314.6
9 54.7 30.5 320.5
10 54.8 31 324.7
11 57.1 31.8 356.7
12 57.8 31.4 370.3
13 62.3 31.5 378
14 66.7 32.1 384.8
15 71.2 32.5 396.9

a. Develop an estimated regression equation with both factors x1 and x2 as the independent variables.
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.976566637371
R Square 0.953682397225
Adjusted R Squar 0.945962796763
Standard Error 10.88623830274
Observations 15

ANOVA
df SS MS F
Regression 2 29281.58712072 14640.79356036 123.5403829337
Residual 12 1422.12221261 118.5101843841
Total 14 30703.70933333

Coefficients Standard Error t Stat P-value

Intercept -138.869993248 156.3645188677 -0.88811703738 0.391931841365
x1 4.494201626742 0.677399399189 6.634493080629 2.41E-05
x2 7.170418838358 6.074523753723 1.180408395632 0.26

b. Are there any variables to be eliminated? If yes, indicate those variables and explain why.
Yes.X2 should be eliminated because it is greater than the 0.05 threshhold p-value for having a 0.26 value
given below.

Significance F
9.87362078E-09

Lower 95% Upper 95% Lower 95.0% Upper 95.0%

-479.559013062 201.8190265657 -479.559013062 201.8190265657
3.01827512498 5.970128128504 3.01827512498 5.970128128504
-6.06483145037 20.40566912709 -6.06483145037 20.40566912709

alue for having a 0.26 value

A survey conducted by a research team was to investigate how the education level, tenure in current employment, and age, a

Education (No. of years) Length of tenure in current employment (No. of years)

17 8
12 12
20 9
14 4
12 1
14 9
12 8
18 10
16 12
11 7
16 14
12 4
16 17
13 7
11 6
20 4
19 7
16 12
12 2
10 6

a. Determine the estimated multiple linear regression equation that can be used to predict the annual income given number o
SUMMARY OUTPUT

Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations

ANOVA

Regression
Residual
Total

Intercept
Education (No. of years)
 Length of tenure in current employment (No. of years)
Age (No. of years)

b. Are there any variables to be eliminated? If yes, indicate those variables and explain why.
Yes. Since the length of tenure in current employment has a value of 0.32, greater than the p-
tenure in current employment, and age, are related to annual income. A sample 20 employees is selected and the data is given below.

Age (No. of years) Annual income ($)

40 124,000
41 30,000
44 193,000
42 88,000
19 27,000
28 43,000
43 96,000
37 110,000
36 88,000
39 36,000
36 81,000
22 38,000
45 140,000
42 11,000
18 21,000
40 151,000
35 124,000
38 48,000
19 26,000
44 124,000

predict the annual income given number of years school completed (Education), length of tenure in current employment, and age.

atistics
0.818606797378511
0.670117088714303
0.608264042848235
32446.8744689261
20

df SS MS F Significance F
3 34218155395.164 11406051798.39 10.83401923594 0.000393506606
16 16844794604.836 1052799662.802
19 51062950000

Coefficients Standard Error t Stat P-value Lower 95%

-143481.192413645 39925.5953997264 -3.59371453267 0.002431284253 -228119.673676
10011.9212403369 2570.58480903386 3.894802927782 0.001287795122 4562.524881568
 -2193.88376370611 2158.82905263426 -1.01623783552 0.324637926042 -6770.3969125
2689.24051661598 986.353429403574 2.726447170404 0.014939599398 598.2646547183

ent has a value of 0.32, greater than the p-value threshhold of 0.05, it should be eliminated
e data is given below.

oyment, and age.

Upper 95% Lower 95.0% Upper 95.0%

-58842.7111512 -228119.673676 -58842.7111512
15461.31759911 4562.524881568 15461.31759911
2382.629385086 -6770.3969125 2382.629385086
4780.216378514 598.2646547183 4780.216378514