Question

The director of marketing at a large company wants to determine if the amount of money spent on internet marketing is a good predictor of company profit. She fits a least-squares regression line to 20 months of data and computes the following regression line:
Profit = 372.6 + 17.2(advertising dollars)

What is the value of the residual for advertising dollars spent equal to $1,020 and Profit equal to $17,500? Round to the nearest integer.

Answer 1

Given:
Profit = 372.60 + 17.2(advertising dollars)
Advertising dollars = 1,020
profit = 17,500

17,500 + residual value = 372.60 + 17.2(1,020)
17,500 + residual value = 372.60 + 17,544
17,500 + residual value = 17,916.60
residual value = 17,916.60 - 17,500
residual value = 416.60

residual value is 416.60 or 417 rounded off to the nearest integer