The regression equation NetIncome = 2,483 + 0.0431 Revenue was estimated from a

Question

The regression equation NetIncome = 2,483 + 0.0431 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).

Calculate the residual for the x, y pair ($44,164, $4,704). (A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

Calculate the residual for the x, y pair ($62,476, $5,581).(A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

The regression equation NetIncome = 2,483 + 0.0431 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).

Explanation / Answer

Answer:

The regression equation NetIncome = 2,483 + 0.0431 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 ($44,164, $4,704). (A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

Predicted NetIncome = 2483+0.0431*44164=4386.4684

  Residual = 4704-4386.4684 = 17.5320

(b-1)

Calculate the residual for the x, y pair ($62,476, $5,581).(A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

      Predicted NetIncome = 2483+0.0431*62476=5175.7156

  Residual = 5581-5175.7156 = 405.2844

(a-2) Did the regression equation underestimate or overestimate the net income?

The regression equation underestimates the net income.

The regression equation NetIncome = 2,483 + 0.0431 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).

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