9. What is predicted profit when assets = 30 and sales = 40. Assets, sales, and

Question

9. What is predicted profit when assets = 30 and sales = 40.

Assets, sales, and profit were obtained from the Dow Jones 30 industrials. A multiple regression analysis was done to predict profit from assets and sales. Excel output was shown below. Use the output to answer questions 8 through 10 Regression Statistics Multiple R R Square Adjusted R Square0349 Standard Error Observations 0.628 0.394 2.450 30 ANOVA df MS 2105.402 52.701 8.783 27 162.012 6.000 29 267.414 0.001 Regression Residual Total 95% 3.740 0.014 0.050 Stand error t Stat P-value 0.682 3.431 0.002 0.003 2156 0.040 2.220 0.035 Lower 95% 0.941 0.000 0.002 coeff Intercept Assets Sales 2.340 0.007 0.026 0.012

Explanation / Answer

9. From the output,

The regression equation is:

Profit = 2.34 + 0.007 Assets + 0.026 Sales

For Assets = 30 and Sales = 40,

Profit = 2.34 + 0.007*30 + 0.026*40

Profit = 3.59

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