Question

A linear regression model for the revenue data for a company is R=25.9t + 204 where R is total annual revenue and t is time since 1/31/02 in years.

Answer 1

The linear regression model is

`R=25.9t+204`

Where

R is the total annual revenue (dependant variable)

t is the time, in years, since 1/31/02 (independent variable)

To predict the annual revenue for the period ending 1/31/10, the first step is to determine the value of t. Considering that t=0 is the first recorded year (1/31/02), the value of t corresponding to period 1/31/10 is the number of years passed since, including 2002, which is 9 years.

So you have to calculate R for t=9. Replace the formula with t=9 and calculate the corresponding value of R

`\begin{gathered} R=25.9\cdot9+204 \\ R=437.1 \end{gathered}`

R≈437 billion dollars