The regression equation NetIncome = 2,173 + 0.0478 Revenue was estimated from a
ID: 3063673 • Letter: T
Question
The regression equation NetIncome = 2,173 + 0.0478 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).
(a-1) Calculate the residual for the x, y pair ($41,463, $4,160). (A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)
Residual =
(a-2) Did the regression equation underestimate or overestimate the net income?
The regression equation underestimated the net income.
The regression equation overestimated the net income.
(b-1) Calculate the residual for the x, y pair ($62,027, $5,099).(A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)
Residual =
(b-2) Did the regression equation underestimate or overestimate the net income?
The regression equation overestimated the net income.
The regression equation underestimated the net income.
Explanation / Answer
a-1) residual =actual value -predicted value =4160-(2173+0.0478*41463)=5.0686
a-2) The regression equation underestimated the net income. (as rsidual value is posiitve)
b-1) residual =actual value -predicted value =5099-(2173+0.0478*62027)=-38.8906
b-2) The regression equation overestimated the net income.
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