The following table shows the mean annual percent return on

The following table shows the mean annual percent return on capital

(profitability) and the mean annual percentage sales growth for eight aerospace

and defense companies.

Company Profitability Growth

Alliant Techsystems 23.1 8.0

Boeing 13.2 15.6

General Dynamics 24.2 31.2

Honeywell 11.1 2.5

L-3 Communications 10.1 35.4

Northrop Grumann 10.8 6.0

Rockwell Collins 27.3 8.7

United Technologies 20.1 3.2

a. Compute the correlation coefficient. Discuss what the correlation coefficient is

telling you with regard to the relationship between profitability and growth.

b. Conduct a test of hypothesis to determine if it is reasonable to conclude that the

population correlation is greater than zero. Use the .05 significance level.

c. Develop the regression equation for profitability based on growth. Is the slope of

the regression line positive or negative?