Question

A recent article in BusinessWeek listed the “Best Small Companies.” We are interested in the current results of the companies' sales and earnings. A random sample of 12 companies was selected and the sales and earnings, in millions of dollars, are reported below.

Company	Sales ($ millions)			Earnings ($ millions)			Company	Sales ($ millions)			Earnings ($ millions)
Papa John's International	$	86.8		$	5.0		Checkmate Electronics	$	15.4		$	2.6
Applied Innovation		18.9			4.4		Royal Grip		10.8			1.7
Integracare		17.2			1.5		M-Wave		15.5			3.3
Wall Data		74.6			8.2		Serving-N-Slide		53.6			8.5
Davidson & Associates		59.9			6.9		Daig		26.6			6.0
Chico's FAS		49.6			4.1		Cobra Golf		66.5			11.0

Let sales be the independent variable and earnings be the dependent variable.

    

(a)	Compute the correlation coefficient. (Round your answer to 3 decimal places.)

     

Coefficient of correlation

     

(b)	Compute the coefficient of determination. (Round your answer to 3 decimal places.)

     

Coefficient of determination

     

(c)	Determine the regression equation. (Round your answers to 4 decimal places.)

       

The regression equation, with the coefficients, is YˆY^ = ______ +_____  X

     

(d)	For a small company with $50 million in sales, estimate the earnings. (Round your answer to 4 decimal places.)

      

Estimated earnings

$  millions

Answer 1

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I have performed the linear regression analysis on the data in the question. All parts are answered in the image ( below):