What is the predicted net profit for 2006

Reference no: EM13178312

A store wishes to predict net profit as a function of sales for the next year. The following table gives the years 1998 to 2005.

Year Sales

(thousands of dollars) Net Profit
1998 48 8.0
1999 52 9.4
2000 53 11.3
2001 78 8.6
2002 80 6.6
2003 70 4.1
2004 62 -1.0
2005 55 -2.0

(a) Graph the points from 1998 through 2005 on a scatter diagram using Sales as the independent variable and Net Profit as the dependent variable.

(b) Draw the regression line on the graph you constructed in Part (a).

(c) What is the value of the coefficient of determination for this regression model? Comment on the strength of the regression line for this model.

(d) What is the predicted net profit for 2006 if sales are expected to be 75?

Reference no: EM13178312

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