# Project part c: regression and correlation analysis

Using MINITAB perform the regression and correlation analysis for the data on CREDIT BALANCE (Y) and SIZE (X) by answering the following.

1. Generate a scatterplot for INCOME ($1000) vs. CREDIT BALANCE($), including the graph of the “best fit” line. Interpret.

2. Determine the equation of the “best fit” line, which describes the relationship between INCOME and CREDIT BALANCE.

3. Determine the coefficient of correlation. Interpret.

4. Determine the coefficient of determination. Interpret.

5. Test the utility of this regression model (use a two tail test with α =.05). Interpret your results, including the p-value.

6. Based on your findings in 1-5, what is your opinion about using CREDIT BALANCE to predict INCOME? Explain.

7. Compute the 95% confidence interval for beta-1 (the population slope). Interpret this interval.

8. Using an interval, estimate the average income for customers that have credit balance of $4,000. Interpret this interval.

9. Using an interval, predict the income for a customer that has a credit balance of $4,000. Interpret this interval.

10. What can we say about the income for a customer that has a credit balance of $10,000? Explain your answer.

11.

In an attempt to improve the model, we attempt to do a multiple regression model predicting INCOME based on CREDIT BALANCE, YEARS and SIZE.

Using MINITAB run the multiple regression analysis using the variables CREDIT BALANCE, YEARS and SIZE to predict INCOME. State the equation for this multiple regression model.

12. Perform the Global Test for Utility (F-Test). Explain your conclusion.

13. Perform the t-test on each independent variable. Explain your conclusions and clearly state how you should proceed. In particular, which independent variables should we keep and which should be discarded.

14. Is this multiple regression model better than the linear model that we generated in parts 1-10? Explain.

All DeVry University policies are in effect, including the plagiarism policy.

Project Part C report is due by the end of Week 7.

Project Part C is worth 100 total points. See grading rubric below.

Summarize your results from 1-14 in a report that is three pages or less in length and explains and interprets the results in ways that are understandable to someone who does not know statistics.

Submission: The summary report + all of the work done in 1-14 (Minitab Output + interpretations) as an appendix.

Format:

Summary Report

Points 1-14 addressed with appropriate output, graphs and interpretations. Be sure to number each point 1-14.

Project Part C: Grading Rubric

Category Points % Description

Questions 1 – 12 and 14 – 5 pts. each 65 65 addressed with appropriate output, graphs and interpretations

Question 13 15 15 addressed with appropriate output, graphs and interpretations

Summary 20 20 writing, grammar, clarity, logic, and cohesiveness

Total 100 100 A quality paper will meet or exceed all of the above requirements.