Question

The value of a sports franchise is directly related to the amount of revenue that a franchise can generate. The accompanying data table gives the value and the annual revenue for 15 major sport teams. Suppose you want to develop a simple linear regression model to predict franchise value based on annual revenue generated. Complete parts​ (a) through​ (b) below.

Annual Revenue(millions_of_dollars)   Franchise_Value_(millions_of_dollars)
229   654
248   765
192   424
191   472
194   394
162   242
183   405
159   302
237   511
272   888
183   247
225   646
216   504
243   581
228   507

a. Use the​ least-squares method to determine the regression coefficients b0 and b1

b0=

b1=

b. predict the mean franchise value (in millions of dollars) of a sports team that generates $250 million of annual revenue

Yi= $ ____ million (round to nearest integer)

Answer 1

The statistical software output for this problem is:

On the basis of above output:

a) bo = -565.90

b1 = 5.07

b) Predicted value for $250 million revenue = $ 702 million