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In a random sample of eight military contracts involving cost overruns, the following information was obtained. x = bid price of the contract (in millions of dollars) and y = cost of overrun (expressed as a percent of the bid price).
X 6 40 3 5 9 18 16 21
Y 31 25 39 35 29 12 17 8
a. Find the slope, b, and the intercept, a, for the least squares line. Write the equation of the least squares line.
b. Find , the correlation coefficient, r.
c. If an overrun contract was bid at 12 million dollars, what does the least squares line predict for the cost overrun (as a percent of bid price)?
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