The regression equation NetIncome = 2,371 + 0.0444 Revenue was estimated from a

Question

The regression equation NetIncome = 2,371 + 0.0444 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).

Calculate the residual for the x, y pair ($49,911, $4,225). (A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

Calculate the residual for the x, y pair ($64,709, $5,342).(A negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

The regression equation NetIncome = 2,371 + 0.0444 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars).

Explanation / Answer

a1) predicted value

NetIncome = 2371+0.0444*49911 = $4587.048

Residual = $4225-$4587.048 = -$362.0484

Residual =-$362.0484

a3) The regression equation overestimated the net income.

a1) predicted value

NetIncome = 2371+0.0444*64709 = $5244.0796

Residual = $5342-$5244.0796 = $97.9204

Residual =$97.9204

a2) The regression equation underestimated the net income.

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