The document analyzes data on annual return on investment (ROI) for two college majors: business and engineering. Regression analyses were conducted for each major and found a negative linear relationship between cost and annual ROI. The analyses indicated that over 90% of the variation in annual ROI could be explained by cost for both majors. Confidence intervals and hypothesis tests were also reported.
1. Project Week 7
1.
Both graphs shows a possibility of negative linear relationship
between the cost and Annual % ROI in both majors.
2.
Regression analysis for business major
SUMMARY OUTPUT
Regression Statistics
4. Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Lower 95.0%
Upper 95.0%
Intercept
0.11803988
0.00242949
48.58621379
0.00000000
0.11293570
0.12314405
0.11293570
0.12314405
Cost
-0.00000021
0.00000001
-16.94758619
0.00000000
-0.00000024
-0.00000019
-0.00000024
-0.00000019
The regression equation is
And the Adjusted value is 0.9377.
This means that 93.77 % of annual % ROI is explained by Cost.
Regression analysis for engineering major
SUMMARY OUTPUT
9. 1. Estimated ‘Annual % ROI’ when the ‘Cost’ (X) is $160,000.
For engineering major
Therefore the predicted value is
For business major
Therefore the predicted value is
2. To test the hypothesis that
H0: β1 = 0
Ha: β1 ≠ 0
For business major, we have the t-statistic as -16.94758619 with
a p-value being 0.00. Since this value is less than 0.05, we
reject the null hypothesis and conclude that β1 is significant
(different from zero).
For engineering major, we have the t-statistic as -
18.78493483with a p-value being 0.00. Since this value is less
than 0.05, we reject the null hypothesis and conclude that β1 is
significant (different from zero).
3. From the output above, all the regression estimates from both
majors are significant since their corresponding p value are less
than 0.05. In both cases, the coefficient of determination is high
(more than 90%) indicating that most of the variation in annual
% ROI is explained by cost.
The plots indicate a possibility of negative linear relationship,
which is confirmed by the regression coefficient estimates.
These estimates are significant as confirmed by the test of
hypotheses done above. This shows that a linear regression is fit
to model the given data.
Scatter plot with Regression line for Business major
12. Cost
Annual ROI
1. Business major
One-Sample Test
Test Value = 160000
t
df
Sig. (2-tailed)
Mean Difference
95% Confidence Interval of the Difference
Lower
Upper
cost
2.535
19
.020
$28,632.000
$4,995.67
$52,268.33
Let µ be the mean cost for business major.
13. The hypotheses are
Ho: µ=160000 vs Ha: µ≠160000
The t value is 2.535 with a p value of .020 which is less than
0.05. Thus we reject Ho at 5% level and conclude that the mean
cost for business major is not equal to 160000.
Engineering major
One-Sample Test
Test Value = 160000
t
df
Sig. (2-tailed)
Mean Difference
95% Confidence Interval of the Difference
Lower
Upper
cost
-1.076E4
19
.000
$-159,835.900
$-159,866.99
$-159,804.81
Let µ be the mean cost for engineering major.
The hypotheses are
Ho: µ=160000 vs Ha: µ≠160000
The t value is -1.076E4 with a p value of 0.00 which is less than
0.05. Thus we reject Ho at 5% level and conclude that the mean
14. cost for engineering major is not equal to 160000.
2.
t-Test: Two-Sample Assuming Unequal Variances
30 Year ROI
30 Year ROI
Mean
1477800
1838000
Variance
17673957895
32327578947
Observations
20
20
Hypothesized Mean Difference
0
df
35
t Stat
-7.203889288
P(T<=t) one-tail
1.04423E-08
t Critical one-tail
1.306211802
P(T<=t) two-tail
15. 2.08847E-08
t Critical two-tail
1.68957244
Let µ1 and µ2 be the mean cost for business major and
engineering major respectively.
The hypotheses are
Ho: µ1 = µ2 vs Ha: µ1 < µ2
This is a one tailed test. The t value is 1.306211802 with a p
value of 2.08847E-08 which is less than 0.1. Thus there is
enough evidence to reject Ho at 10% level and conclude that the
mean cost for engineering major is higher than that of business
major.
Engineering Major
Confidence Interval for the Proportion
Business Major
Out of 20 schools, we have 16 private schools. So and.
The 90% confidence interval is given by
This means that we are 90% confident that the true proportion
of private schools who major in business lies in this interval.
Out of 20 schools, we have 11 private schools. So and.
The 90% confidence interval is given by
This means that we are 90% confident that the true proportion
of private schools who major in engineering lies in this interval.
Confidence interval for mean
Business major
The mean for this category is and sample standard deviation is .
The sample size is 20. C.I is given by
16. This means that we are 95% confidence that the Annual ROI for
business major lies in the interval 7.31% and 8.33%.
Engineering Major
The mean for this category is 9.15 and sample standard
deviation is 0.0146.
The sample size is 20. C.I is given by
This means that we are 95% confidence that the Annual ROI for
engineering major lies in the interval 8.47% and 9.88%.
Using the ROI data set:
1. If we select 7 colleges from a major and then record whether
they are of ‘School Type’ ‘Private’ or not, is this experiment a
binomial one? Why or why not?
Yes, the experiment is a binomial in nature.
The binomial distribution (experiment) is a type of distribution
in statistics that has two possible outcomes (the prefix “bi”
means two, or twice).
The experiment is Binomial since it meets the following
criteria:
1. There are a fixed number of trials (a fixed sample size). In
the case above, if a major is selected (e. g engineering or
business) there are fixed number of trials (sample size) i.e. 20.
17. 2. On each trial, the event of interest either occurs or does not.
In the experiment above, the event of interest (‘Private’) occurs
when the observed event is “Private” and does not occur if the
outcome is “Public”.
3. The probability of occurrence (or not) is the same on each
trial for each major choosen.
4. Trials are independent of one another. Each experiment is
independent of the preceding one in this case.
The two events, of selecting from a major (engineering and
business) are independent; therefore the probability of college
picked from the column for ‘School Type’ is ‘Private’ shall be
presented independently for each major with the probability of
success in all the seven be represented as follows:
Where:
B= binomial probability
x = total number of Private colleges observed
p = probability of observing a ‘Private’ on an individual trial
(0.55 and 0.8 respectively)
n = number of trials (fixed sample size)
For Engineering Major;
For Business Major;
18. 2. For each of the 2 majors determine if the ‘Annual % ROI’
appears to be normally distributed. Consider the shape of the
histogram and the measures of central tendency (mean and
median) to justify your results. Report on each of these with
charts and calculations to justify your answers.
Engineering Major
Histogram
% and %.
Since the Histogram is right skewed, and the corresponding
shape is not bell-shape (not-symmetrical about the mean
9.145%) we conclude that the “Annual ROI” is not normally
distributed.
Business Major
Histogram
% and %. Similarly since histogram (business major) is also
right-skewed and the shape of the curve is again not symmetric
about the mean (mean= 7.82%) therefore we can confidently
conclude that based on the sampled data analyzed that the
19. ‘Annual % ROI’ is not normally distributed.
Histogram-Engineering Major
Frequency 7 8 9 11 12 More 0 9 2
6 3 0
Annual % ROI
Frequency
Histogram-Business Major
Frequency 6 7 8 9 10 11 More 0 2
12 2 3 1 0
Annual % ROI
Frequency
20
(:,)(0.8)(10.8)
xnx
x
BxnpC
-
=·-
()9.145
Engineer
Mean
m
=
8.5
Engineer
Median
=
sin
7.35
Buess
Median
=
sin
()7.82
22. probability that a college picked from the column for ‘School
Type’ is ‘Private’.
It’s important to note that the two events are independent;
therefore the probability of college picked from the column for
‘School Type’ is ‘Private’ shall be presented independently for
each major. (i.e. Engineering and Business).
For Engineering Major;
= =0.55
For Business Major;
==0.8
3. By hand or with Excel, for each of the 2 majors find the
probability that a college with the ‘School Type’ ‘Private’ has a
’30-Year ROI’ between $1,500,000 and $1,800,000.
For Engineering Major;
23. Therefore, for the Engineering Major the probability that a
college with the ‘School Type’ ‘Private’ has a ’30-Year ROI’
between $1,500,000 and $1,800,000 is approximately 0.3636.
For Business Major;
On the other hand, for the Business Major the probability that a
college with the ‘School Type’ ‘Private’ has a ’30-Year ROI’
between $1,500,000 and $1,800,000 is approximately 0.25.
11
20
16
20
($1,500,000"30_"$1,800,000)
Pr($1,500,000"30_"$1,800,000|''Pr')
(_Pr_)
NyearROI
yearROICollegeivate
NtotalivateCollege
<-<
<-<==
4
0.3636
11
=»
4
0.25
16
»
24. Pr('Pr
(Pr)
(_._)
')
NumberofFavorableOutcomesivate
TotalNumberofPossibleOutc
obabi
omesTotalN
lityCollegeiva
oofColle
te
ges
==
()
()
Nprivate
Ntotal
=
Project Week 1
From the pie chart above the number of private schools are
more than the public schools for a Business major
For Engineering major above the private schools are more than
the public schools.
1. It is seen that the percentage of private schools for a
Business Major is greater than for an Engineering major. Thus
the number of private in Business major is more than that in
Engineering major.
1. We can also see that the percentage of public schools in
Engineering major is greater than that in Business major thus
there are more public
25. 1. schools in Engineering major than in Business major.
For each of the 2 majors create a frequency distribution and
histogram using the column ‘Annual % ROI’. Group with
starting at 6% (0.06), ending at 11% (0.11), and go by 0.5%
(0.005).
Annual ROI frequency distribution for business major
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
6.50% - 6.99%
2
9.5
10.0
10.0
7.00% - 7.49%
9
42.9
45.0
55.0
7.50% - 7.99%
3
14.3
15.0
27. Total
21
100.0
1. From the table above for business major the (7.00%-7.49%)
of annual%ROI has the greatest frequency hence greatest
percentage.
1. The annual%ROI for (9.00%-9.49%) and (9.50%-9.99%)
categories have the same frequency hence the same percentage
of occurrence
1. We can also see that the annul%ROI for(6.50%-6.99%) and
(10.00%-10.49%) have the same frequency
1. From the histogram for Business major the annual% ROI
falling between (7.00%-7.49%) has the largest bar hence highest
frequency.
1. The annual%ROI falling between (6.50%-6.99%) and
(10.00%-10.49%) have same length of bars hence same
frequency
Annual ROI frequency distribution for Engineering major
Frequency
Percent
Valid Percent
29. 100.0
Total
20
100.0
100.0
1. From the frequency distribution for Engineering major we
can see that the annual%ROI for (7.50% - 7.99%) has the
highest frequency hence highest percentage
1. annaul%ROI for (9.50%-9.99%) and (10.00%-10.49%) have
the same frequency and percentage
1. From the Engineering major histogram we can see that
(7.50% - 7.99%) has the largest bar thus has the highest
frequency.
1. We can also see that (9.50%-9.99%) and (10.00%-10.49%)
has equal bars hence the same frequency.
References
Kazmier, L., & Staton, M. (2003). Business statistics
(Abridgement [ed.] / ed.). New York: McGraw-Hill.
Newbold, P., & Carlson, W. (2007). Statistics for business and
economics (6th ed.). Upper Saddle River, N.J.: Pearson Prentice
Hall.