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    Correlation Coefficient Computation of Sales, Costs and GNP

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    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

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    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.

    $2.19

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