Question

2. Plattsburgh Construction Company (PCC) renovates old homes in Plattsburgh. Over time, the company has found that its dollar volume of renovation work is dependent on the Plattsburgh area payroll. The figures for Plattsburgh Construction Company’s sales and the amount of money earned by wage earners in Plattsburg for the past six years are presented in the following table.

Year	1	2	3	4	5	6
Local Payroll ($1,000,000s)	3	4	6	4	2	5
PCC’s Sales ($100,000s)	6	8	9	5	4.5	9.5

Conducts a regression analysis and fill in blanks.

Regression Statistics
Multiple R
R Square
Observation	6

	df	SS	MS	F	Significance F
Regression
Residual
Total
	Coefficient	Standard Error	t-Stat	P-value
Intercept
X variable 1

1. State the prediction equation or the regression model.

2. What percent of the variations in PCC’s sales is explained by the model? Is the model powerful in prediction sales? Explain.

3. What do F-ratio and P-value tell about the above regression model?
4. Based on the regression model, what are PCC’s predicted sales if the local payroll is predicted to be $7 million next year?

Answer 1