Using the output of the least square analysis, given below, show the formula for the least squares line, plot it on your scatter diagram and verify significance of the variable sales.
c. The correlation between sales and earnings is 0.67. At the .05 significance level, can we
conclude that there is a nonzero correlation in the population?
d. Give the prediction of earnings for company with 50 million in sales and find 95% confidence
for expected value of earnings given 50 million in sales.
Model 1: OLS, using observations 1-12
Dependent variable: earnings
Coefficient Std. Error t-ratio p-value
const 1.85174 1.41257 1.311 0.2192
sales 0.0835745 0.0290062 2.881 0.0164 **
Mean dependent var 5.341667 S. D. dependent var 3.247505
Sum squared resid 63.38726 S. E. of regression 2.517683
Mean independent var 41.75800 S. D. independent var 26.17100