Question: Research and Development Managers are regularly interested in ascertaining an empirical relationship between company sales and expenditure on research and development. The business analytics

Research and Development Managers are regularly interested in ascertaining an empirical relationshipbetween company sales and expenditure on research and development. The business analytics

Research and Development Managers are regularly interested in ascertaining an empirical relationship between company sales and expenditure on research and development. The business analytics division of one major company has collected data from a random sample of 15 companies and estimated the above empirical relationship using the following regression model. SALES 4570.2 2830 596.8 133.6 42 390 93.9 907.9 19773 39709 2936.5 2513.8 1124.8 921.6 2432.6 RD 430.6 59 23.5 3.5 1.7 8.4 2.5 39.9 1136 1428 45.3 65.2 20.3 15.6 74 y = B + Bx + e where yi is the annual sales (SALES) and xi is the annual expenditures on research and development (RD) (both are in millions of dollars). The estimated simple linear regression model output is presented below. EViews Output Dependent Variable: SALES Method: Least Squares Date: 06/16/22 Time: 16:12 Sample: 1 15 Included observations: 15 Variable Coefficient Std. Error t-Statistic Prob. C RD 107.5368 897.8437 0.119772 0.9065 23.06923 1.849947 12.47021 0.0000 R-squared 0.922851 Mean dependent var 5265.047 Adjusted R-squared 0.916917 S.D. dependent var 10707.80 S.E. of regression 3086.429 Akaike info criterion 19.03098 Sum squared resid 1.24E+08 Schwarz criterion 19.12539 Log likelihood -140.7324 Hannan-Quinn criter. 19.02998 F-statistic Prob(F-statistic) 155.5061 Durbin-Watson stat 2.332988 0.000000

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