MA215 Grantham Week 7 ROI Data Coefficient of Determination Project

Project Week 7

For these project assignments throughout the course you will need to reference the data in the ROI Excel spreadsheet. Download it here.

Using the ROI data set:

For each of the two majors:

  1. Create a scatter diagram of Y = ‘Annual % ROI’ against X = ‘Cost’. Include the trendline, the equation of the trendline, and the coefficient of determination on the graph.
  2. Obtain b0 and b1 of the regression equation defined as y ̂ = b0 + b1X. Hint from Dr. Klotz: You can get this right from the trendline.
  3. Calculate the estimated ‘Annual % ROI’ when the ‘Cost’ (X) is $160,000.
  4. Conduct a full hypothesis test: You will be in charge. Set your own significance level. The hypotheses are given.
    • H0: β1 = 0
    • Ha: β1 ≠ 0
    • Hint: Remember that a full hypothesis test is more than running the data analysis program. What were the steps from last week’s discussion?
  5. In a highlighted box, discuss your final conclusion from this hypothesis test. For each major, is Annual % ROI related to Cost for business? For engineering? If so, describe the relationship in words. How does the outcome of this hypothesis test related to the central question of which ROI is better?

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