The following are data on the ages and incomes of 5 executiv

The following are data on the ages and incomes of 5 executives working for the same company and the number of years they went to college. Fit an equation in the form y = beta_0 + beta_1 x_1 + beta_2 x_2 Use the equation obtained in part (a) to estimate how much on the average an executive working for this company will make if he is 40 years old and has had 4 years of college.

Solution

a. The regression equation, using Multiple Regression in Excel : Data Analysis -> Input Y and X data -> Look at coefficients column in Regression results:

y = 23,721.32 + 960.925*Age + 2,975.66*YearsCollege

b. Using the above equation:

When Age = 40 and Years college = 4

Income = 23,721.32 + 960.925*40 + 2,975.66*4 = $ 74,060.96