Question

1. The following table shows the salaries of five managers and their years of work experience in managerial positions.

Years of Salary Experience ($1000s)

6 120

5 95

4 88

10 150

5 97

a. Use the method of Ordinary Least Square (OLS) to compute the slope

and intercept of sample regression line. You need to decide which

one is the dependent variable. In addition, write down the estimated

sample regression line.

b. Explain the meaning of each estimated coefficient (slope and

intercept) in the context of this problem and plain English.

c. Use a = 0.05 to check if β1 is statistically equal to or different from zero. What is your conclusion?

e. Use 1 -α = 0.99 to estimate a confidence interval for the salary of managers who have 8 years of experience.

Please explain steps to the best ability

Answer 1

ANOVA table

Source	DF	Sum of Square	Mean Square	F Statistic	P-value
Regression (between ŷiand yi)	1	2446.545455	2446.545455	55.834025	0.00496370
Residual (between yiand ŷi)	3	131.454545	43.818182
Total(between yiand yi)	4	2578.000000	644.500000