Question 5 The following table shows the mean annual percent return on capital (profitability) and the mean annual percentage sales growth for eight aerospace and defense companies. Company Profitability (v) Growth (x) (d) (e) A 20 6 B 10 5 C 30 9 D 15 4 E 20 8 F 30 12 G 40 15 H 20 5 (a) Develop the regression equation for profitability based on growth. Interpret the estimated parameters. (b) Predict the profitability of a company with a percentage sales growth 20. (c) Determine the association between profitability and growth. Interpret your results. What percentage variation in profitability is not attributed to growth? Conduct a test of hypothesis to determine if it is reasonable to conclude that the correlation coefficient is significant. Use the 1% significance level.

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Question 5
The following table shows the mean annual percent return on capital (profitability) and the mean
annual percentage sales growth for eight aerospace and defense companies.
Company
Profitability (v)
Growth (x)
A
20
6
B
10
5
C
30
9
D
15
4
E
20
8
F
30
12
G
H
40 20
15
5
(a) Develop the regression equation for profitability based on growth. Interpret the estimated
parameters.
(b) Predict the profitability of a company with a percentage sales growth 20.
(c)
Determine the association between profitability and growth. Interpret your results.
(d) What percentage variation in profitability is not attributed to growth?
Conduct a test of hypothesis to determine if it is reasonable to conclude that the correlation
coefficient is significant. Use the 1% significance level.
Transcribed Image Text:Question 5 The following table shows the mean annual percent return on capital (profitability) and the mean annual percentage sales growth for eight aerospace and defense companies. Company Profitability (v) Growth (x) A 20 6 B 10 5 C 30 9 D 15 4 E 20 8 F 30 12 G H 40 20 15 5 (a) Develop the regression equation for profitability based on growth. Interpret the estimated parameters. (b) Predict the profitability of a company with a percentage sales growth 20. (c) Determine the association between profitability and growth. Interpret your results. (d) What percentage variation in profitability is not attributed to growth? Conduct a test of hypothesis to determine if it is reasonable to conclude that the correlation coefficient is significant. Use the 1% significance level.
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