Question

Note- after is says answer, those are the answer choices

Scenario:

Tracy Clark just recently completed her first year of full time work. She has no children, is not married, and is enrolled full time in college. Now she needs to complete the W-2 form. She has worked for a full year at the Happy Hotel. She earned a total of $22,000 this year. She knows from looking at her paycheck stubs that she had a total of $432 of federal income withheld. She also noted that she had $500 of social security tax as well as $332 of medicare tax withheld from her paycheck. With this knowledge help Tracy complete her W-2 form.

Directions:

Please complete the W2 form by answering the questions that follow.

1. Wages, tips and and other compensation: Answer 22,000 500 432 none
2. Federal Income Witheld: Answer 432 22,000 500 none 332
3. Social Security Wages: Answer 22,000 432 500 none 332
4. Social Security Tax Witheld: Answer 50043222,000 none 332
5. Medicare Wages and Tips: Answer 22,000 500432none332
6. Medicare Tax Witheld Answer 332 none50022,000432
7. Social Security Tips: Answer none 33243222,000500
8. Allocated Tips: Answer none 33243250020,000

Answer 1

To solve this question just input those variables which are to be used in logistic regression, as the question talks about using two variables only that is total loans and leases to total assets & total expenses/ total assets, so we will not input total cap/assets as an input variable in our excel, here we go

As one can see, we have taken only two variables , total exp/assets and total lns & leases/ assets in calculation, follwing steps have been followed to construct the above table

1. Assume logit= b0+ b1* independent variable1+ b2* independent variable 2 , take values of b0=0.1, b1=0.1, b2=0.1, note that these values of b0, b1 and b2 are just taken for calculation, one could assume any values here for bo , b1 and b2

2. Calculate exponential of logit in the next column by using exp (value in previous column)

3. Calculate probability by using formula, probability= exp (logit)/ { 1+ exp(logit)} in the next column

4. In next column, calculate log likelihood by using formula : financial condition value (i.e. 1 or 0) * LN( probability calculated in previous column) + (1- financial condition value)* LN( 1- probability calculated in previous column)

5. take the total of the column values of log likelihood

6. use solver function in excel to change this total by putting max value of 0 and changing the variable cells containing assumed values of b0, b1 and b2 , by clicking on solve, you will get actual values of b0, b1 and b2

which comes out to be b0=-14.72, b1=89.83, b2= 8.37

therefore you will get logit as

-14.72+ 89.83* Total exp/assets+8.37*Total lns & lsses/ assets

With values given in the question as total exp/ assets= 0.11 and total loans & leases/ assets= 0.6 , we get

logit as -14.72+ 89.83* 0.11+ 8.37*0.6= 0.1833

exp (logit) = 1.20

Probability= 0.546

Loglikelihood= 1*LN(0.546)+0*LN(1-0.546)= LN(0.546)= -0.605