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Regression Analysis: Sales Total Vs Profit Total

A company produces the financial results shown in the table below. The executives at the firm have good reason to believe that $10 million in sales will be generated in 2010. Using simple linear regression, you advise them that this will equate to...

Year Sales Totals (in millions) Profit Totals (in millions)
1998 $7.0 $0.15
1999 $2.0 $0.10
2000 $6.0 $0.13
2001 $4.0 $0.15
2002 $14.0 $0.25
2003 $15.0 $0.27
2004 $16.0 $0.24
2005 $12.0 $0.20
2006 $14.0 $0.27
2007 $20.0 $0.44
2008 $15.0 $0.34
2009 $7.0 $0.17

a. $209,600 in profits.
b. $2,096,000 in profits.
c. $186,900 in profits.
d. $1,869,000 in profits.

22. When the CEO asks you how sure you are of the accuracy of the result provided in Problem #21 above, you show her the r-squared value and respond...
a. "54% sure."
b. "67% sure."
c. "84% sure."
d. "93% sure."

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Solution Summary

The solution provides step by step method for the calculation of regression analysis. Formula for the calculation and Interpretations of the results are also included.

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