The regression equation NetIncome = 2,417 + 0.0414 Revenue was estimated from a
ID: 3315862 • Letter: T
Question
The regression equation NetIncome = 2,417 + 0.0414 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).
(a-1)
Calculate the residual for the x, y pair ($45,753, $4,901). (A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)
Residual
(a-2) Did the regression equation underestimate or overestimate the net income?
The regression equation underestimated the net income.
The regression equation overestimated the net income.
(b-1)
Calculate the residual for the x, y pair ($63,293, $4,070).(A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)
Residual
(b-2) Did the regression equation underestimate or overestimate the net income?
The regression equation overestimated the net income.
The regression equation underestimated the net income.
Explanation / Answer
a-1) at x=45753 revenue ; y =2417 + 0.0414*45753=4311.1742
residual =actual -estimate =4901-4311.1742=589.8258
a-2)as estimate is lower than actual value 4901
The regression equation underestimated the net income.
b-1)
at x=63293 revenue ; y =2417 + 0.0414*63293=5037.33
residual =actual -estimate =4070-5037.33 =-967.33
b-2)as estimate is hgher than actual value
The regression equation overestimated the net income.