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    Confidence Interval and Quantative Analysis

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    A corporation owns several companies. The strategic planner for the corporation believes dollars spent on advertising can to some extent be a predictor of total sales dollars. As an aid in long-term planning, she gathers the followings sales and advertising information from several of the companies for 2002 ($ millions).

    Advertising Sales
    12.5 148
    3.7 55
    21.6 338
    60.0 994
    37.6 541
    6.1 89
    16.8 126
    41.2 379

    b) Determine the Sum of Square Error (SSE) and the Standard Error of Estimate (se ). Think about the variables being analyzed by regression in this problem and comment on the value of se.
    c) Computer r2. Discuss the value of r2 obtained.
    d) Test the slope of the regression line determined in a). Use ? = .10. Discuss the result of the test.
    e) Construct a 98% confidence interval for the average value of y; use x = 20. Interpret the confidence interval.

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    Solution Summary

    Step by step method for computing confidence interval is given in the answer.