A linear regression analysis has produced the following equation relating profits to hours of managerial time spent developing the past year’s projects at a firm: Profits = −$957+$85 × Number of hours
a. According to this estimated relationship, how large would the profits (or losses) be if no time were spent in planning?
b. On the average, an extra 10 hours spent planning resulted in how large an increase in project profits?
c. Find the break-even point, which is the number of hours for which the estimated profits would be zero.
d. If the correlation is r = 0.351, what percentage of the variation in profits is explained by the time spent?
e. How much of the variation in profits is left unexplained by the number of hours spent? Write a paragraph explaining how much faith you should have in this prediction equation and discussing other factors that might have an impact on profits.

  • CreatedNovember 11, 2015
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