The regression equation NetIncome = 2,454 + 0.0313 Revenue was estimated from a
ID: 3360730 • Letter: T
Question
The regression equation NetIncome = 2,454 + 0.0313 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 ($49,963, $4,245). (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 ($63,971, $4,862).(A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)
The regression equation NetIncome = 2,454 + 0.0313 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).
Explanation / Answer
NetIncome = 2,454 + 0.0313 * R
a1) when x = $49,963
y = 2,454 + 0.0313 * 49,963
y = 4017.84
a2) Oberved value = 4245
So,
b1)
y = 2,454 + 0.0313 * 63,971
y = 4456.29
b2) Oberved value = 4862
So,
The regression equation underestimated the net income.