Suppose that laurier company recently bought western company and subsequently te
ID: 3320624 • Letter: S
Question
Suppose that laurier company recently bought western company and subsequently terminated 20 of westerns employess. As a part of the buyout agreement it was promised that hthe severance packages offered to the former Western employees would be equivalent to those offered to laurier employees who had been terminated in the past year. 36 year old bill smith, a western employee for the past ten years, earning $32,000 a year was one of those let go. His severance package included an offer of 5 weeks severance pay. Bill claims this was less than what he should have gotten.
Given:
Weeks SP Age Years Pay
13 37 16 46
13 53 19 48
11 36 8 35
14 44 16 33
3 28 4 40
10 43 9 31
4 29 3 33
a) You would like to prepare a simple regression model to predict weeks of severance pay based upon only the number of years with the company. Perform a simple linear regression of y on x to help test the theory that we can predict number of weeks of severance pay from number of years with the company.
What is the slope of your least squares regression equation?
approx 0.574
approx 0.69
approx 0.83
none of the above
b) You would like to prepare a simple regression model to predict weeks of severance pay based upon only the number of years with the company.
Perform a simple linear regression of y on x to help test the theory that we can predict number of weeks of severance pay from number of years with the company.
Interpret the slope from your least squares regression equation.
on average, for every one year with the company, weeks of severance pay increases by approx 0.574.
on average, for every one week of severance pay, years with the company increases by approx 3.62.
on average, for every one year with the company, weeks of severance pay increases by approx 0.69.
none of the above
a.approx 0.574
b.approx 0.69
c.approx 0.83
d.none of the above
Explanation / Answer
a) The regression equation is
y=a+bx
where y: weeks and x is years
frrom Excel
The fitted equation is
y=2.89+0.64 (years)
hence slope=0.69 (approximatively)
b) on average, for every one year with the company, weeks of severance pay increases by approx 0.69.
SUMMARY OUTPUT Regression Statistics Multiple R 0.901414 R Square 0.812547 Adjusted R Square 0.775057 Standard Error 2.115998 Observations 7 ANOVA df SS MS F Significance F Regression 1 97.04134 97.04134 21.67337 0.005555 Residual 5 22.38723 4.477446 Total 6 119.4286 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 2.893198 1.669246 1.733237 0.143591 -1.39774 7.184131 -1.39774 7.184131 Years 0.636635 0.13675 4.655466 0.005555 0.285108 0.988162 0.285108 0.988162Related Questions
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