Juan Martinez is an analyst at SDA, Inc., a leading mutual fund company. Juan has been...
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Juan Martinez is an analyst at SDA, Inc., a leading mutual fund company. Juan has been asked to develop a regression model for use in predicting the market value of a firm. Table 6.41 shows data that Juan has gathered on 15 firms. The second column of the table shows the market value of each of the 15 firms. The third column shows the total assets of the each firm, and the fourth col- umn shows the total sales of each firm, all for the previous year. The fifth column shows the number of employees at each firm. The data from Table 6.41 is also pro- vided in the spreadsheet SDA.xls. (a) Construct a multiple linear regression model to predict the market value of a firm based on the data that Juan has gathered for the 15 firms. (b) Examine the regression output of your regression model. Is there evidence of multicollinearity in the model? How would you detect it? (c) Propose a simpler model by possibly deleting one or more independent vari- able(s) from your model. (d) Suppose a firm has assets of $1,800 million, sales of $3,500 million and has 31,000 employees. What is your prediction of the firm's market value using your model from part (c)? TABLE 6.41 Firm Number Market Value of Total Assets Total Sales Number of Firm ($ million) ($ million) ($ million) Employees The market value 1 3,023 and related 8,610 10,328 121,000 information for 15 firms for Exercise 6.8. 123456789 1,386 2,593 3,712 55,000 1,949 2,119 3,099 26,700 1,319 1,820 2,553 11,980 867 1,407 1,959 21,900 254 511 911 4,100 191 521 800 7,500 1,969 579 795 6,100 375 368 578 5,400 10 159 190 527 4,400 11 252 741 524 6,950 12 13 14 15 2345 314 322 466 5,000 1,778 398 443 4,890 468 199 443 5,700 267 250 423 5,100 Juan Martinez is an analyst at SDA, Inc., a leading mutual fund company. Juan has been asked to develop a regression model for use in predicting the market value of a firm. Table 6.41 shows data that Juan has gathered on 15 firms. The second column of the table shows the market value of each of the 15 firms. The third column shows the total assets of the each firm, and the fourth col- umn shows the total sales of each firm, all for the previous year. The fifth column shows the number of employees at each firm. The data from Table 6.41 is also pro- vided in the spreadsheet SDA.xls. (a) Construct a multiple linear regression model to predict the market value of a firm based on the data that Juan has gathered for the 15 firms. (b) Examine the regression output of your regression model. Is there evidence of multicollinearity in the model? How would you detect it? (c) Propose a simpler model by possibly deleting one or more independent vari- able(s) from your model. (d) Suppose a firm has assets of $1,800 million, sales of $3,500 million and has 31,000 employees. What is your prediction of the firm's market value using your model from part (c)? TABLE 6.41 Firm Number Market Value of Total Assets Total Sales Number of Firm ($ million) ($ million) ($ million) Employees The market value 1 3,023 and related 8,610 10,328 121,000 information for 15 firms for Exercise 6.8. 123456789 1,386 2,593 3,712 55,000 1,949 2,119 3,099 26,700 1,319 1,820 2,553 11,980 867 1,407 1,959 21,900 254 511 911 4,100 191 521 800 7,500 1,969 579 795 6,100 375 368 578 5,400 10 159 190 527 4,400 11 252 741 524 6,950 12 13 14 15 2345 314 322 466 5,000 1,778 398 443 4,890 468 199 443 5,700 267 250 423 5,100
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Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett
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