# Correlation Coefficient Computation of Sales, Costs and GNP

What is the correlation coefficient between Irwin's sales and costs and between sales and GNP growth?

Year GNP Growth Sales Costs

1990 2.0% $105,400 $71,000

1991 1.5 101,900 72,200

1992 -2.0 100,400 72,300

1993 -1.0 102,200 72,500

1994 0.5 104,000 72,000

1995 -1.0 99,950 71,300

1996 1.0 103,300 72,300

1997 2.0 102,800 72,100

1998 2.5 104,900 72,300

1999 0.0 100,100 72,500

2000 2.0 104,600 71,200

2001 1.5 102,000 71,730

2002 3.0 103,300 70,600

https://brainmass.com/statistics/correlation/correlation-coefficient-computation-of-sales-costs-and-gnp-472942

#### Solution Preview

Using Spreadsheet software:

Pearson r correlation= =PEARSON(D3:D15,E3:E15) ---> this is the formula

Pearson r correlation= -0.3348

Note: The formula is embedded in the attached Spreadsheet file.

How to interpret:

1. Use the Pearson r table.

2. Select .05 level of significance.

3. Find the degrees of freedom. This can be obtained by df-2. Since the ...

#### Solution Summary

The solution computes and interprets the result of the correlation coefficient between Irwin's sales and costs and between sales and GNP growth. A spreadsheet formula was used to solve the problem.