The regression equation NetIncome = 2,371 + 0.0444 Revenue was estimated from a
ID: 3322012 • Letter: T
Question
The regression equation NetIncome = 2,371 + 0.0444 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).
Calculate the residual for the x, y pair ($49,911, $4,225). (A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)
Calculate the residual for the x, y pair ($64,709, $5,342).(A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)
The regression equation NetIncome = 2,371 + 0.0444 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).
Explanation / Answer
a1) predicted value
NetIncome = 2371+0.0444*49911 = $4587.048
Residual = $4225-$4587.048 = -$362.0484
Residual =-$362.0484
a3) The regression equation overestimated the net income.
a1) predicted value
NetIncome = 2371+0.0444*64709 = $5244.0796
Residual = $5342-$5244.0796 = $97.9204
Residual =$97.9204
a2) The regression equation underestimated the net income.