A recent article in Business Week listed the A recent articl

A recent article in Business Week listed the

Solution

For the given set of sales and earnings we have to find a regression equation

Let y = earnings be dependent and x = Sales be independent.

Explanation

Step 1: Find X?Y , X2 and Y2 as it was done in the table below.

Step 2: Find the sum of every column to get:

?X=517 , ?Y=64.1 , ?X?Y=3369.1 , ?X2=30115.32 , ?Y2=458.41

Use formula to get r = 0.6369

coefficient of determination = 0.4056

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a=2.004

b = 0.077

y = 2.004 + 0.077?x is the regression equation.

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d) x= 44 miliion

y = 2.004+0.077(44)

   = 5.392

Hence earnings = 5.392 millions