The regression equation Netlncome = 2,607 + 0.0474 Revenue was estimated from a
ID: 1196961 • Letter: T
Question
The regression equation Netlncome = 2,607 + 0.0474 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars). (a - 1) If Revenue = 1, then Netlncome = million. (Round your answer to 2 decimal places.) (a-2) Choose the correct statement. Decreasing the revenue raises the net income. Increasing the revenue lowers the net income. Increasing the revenue raises the net income. Choose the right option. The intercept is meaningful because a firm can have net income when revenue is zero. The intercept is not meaningful because a firm cannot have net income when revenue is zero. If Revenue = 23,303, then Netlncome = million. (Round your answer to the nearest whole number.)Explanation / Answer
Equation: Net INcome = 2607 + 0.0474Revenue
a1) If revenue is 1
Net income = 2607 + 0.0474(1) = $2607.0474
a2) As the coefficient of revenue is positive, increasing the revenue will raise net income.
b) The intercept is meaningful beacuse a firm can have net income without revenue such as wind fall gain, income from sale of capital goods etc.
c) Revenue = 23303
Net income = 2607 + 0.0474(23303) = $3711.562