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Use the regression line above to estimate the net earnings

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Reference no: EM13574657

In a recent survey concerning company sales and net earnings, 15 companies responded. Data analysis was computed, letting sales ($ thousands) be the independent variable, and net earnings ($ thousands) be the dependent variable.

The results are as follows:

Regression analysis:

Observations                         n = 15

Intercept                               -0.07

Sales of coefficient                 0.07

Coefficient of correlation        r= 0.537

Value of t-statistics                t= 2.382

Using this information, answer the following questions.

a) Use the regression line above to estimate the net earnings for a company with sales of $62.4 thousand. For full marks, estimate your answer to the nearest dollar.

Earnings: $ 0

b) Given the regression equation provided above, which of the following statements is most appropriate regarding company sales and earnings?

  • Positive sales means positive net earnings for any business.
  • Sales have no effect on net revenues.
  • Insufficient sales can lead to net losses for some businesses.
  • After a certain level of sales has been reached, net earnings stop growing entirely.

Reference no: EM13574657

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