Question

The regression equation NetIncome 2,024 0.0335 Revenue was estimated from a sample of 100 leading world companies (variables are in millions of dollars) . Calculate the residual for the x, y pair ($43,675, $3,423). (Negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

Answer 1

To find the residual, substitute the given x and y values into the regression equation and calculate the difference between the actual and predicted values.

Step-by-step explanation:

To find the residual for the given x, y pair in the regression equation NetIncome = 2,024 + 0.0335 * Revenue, we need to substitute the given x and y values into the equation.

Given x = $43,675 and y = $3,423, we substitute these values into the equation:

NetIncome = 2,024 + 0.0335 * Revenue

NetIncome = 2,024 + 0.0335 * $43,675

NetIncome = 2,024 + $1,464.7625

NetIncome = $3,488.7625

The residual is the difference between the predicted value (calculated from the equation) and the actual value:

Residual = Actual Value - Predicted Value

Residual = $3,423 - $3,488.7625

Residual = -$65.7625