School of Business and Economics

Department of Business Administration

GE-FEL AMSR: Applied Multivariate Statistics for Researchers

Group 10 (12:00 PM - 1:30 PM TTh)

Assignment on Correlation & Regression Analysis

Submitted by:

Ares, Therese Margaret

Avila, Pearl Ashley
Clemente, Justin Joshua
Palaganas, Mckenzie
Toledo, Cary

Submitted to:
MR. RENE N. ARGENAL
Teacher

April 17, 2022

 According to Advertising Age’s annual salary review, Mark Hurd, the 49-year-old
chairman, president, and CEO of Hewlett-Packard Co., received an annual salary of $817,000, a
bonus of more than $5 million, and other compensation exceeding $17 million. His total
compensation was slightly better than the average CEO total pay of $12.4 million. The following
table shows the age and annual salary (in thousands of dollars) for Mark Hurd and 14 other
executives who led publicly held companies (Advertising Age, December 5, 2006).

Executive Title Company Age Salary

($1000s)

Charles Prince Chmn/CEO Citigroup 56 1000

Harold McGraw III CHMN/Pres/CEO McGraw-Hill Cos 57 1172

James Dimon Pres/CEO JP Morgan Chase & Co. 50 1000

K. Rupert Murdoch Chmn/CEO News Corp 75 4509

Kenneth D. Lewis CHMN/Pres/CEO Bank of America 58 1500

Kenneth I. Chenault Chmn/CEO American Express Co. 54 1092

Louis C. Camilleri Chmn/CEO Altria Group 51 1663

Mark Hurd CHMN/Pres/CEO Hewlett-Packard Co. 49 817

Martin S. Sorrell CEO WPP Group 61 1562

Robert L. Nardelli CHMN/Pres/CEO Home Depot 57 2164

Samuel J. Palmisano CHMN/Pres/CEO IBM Corp 55 1680

David C. Novak CHMN/Pres/CEO Yum Brands 53 1173

Henry R. Silverman Chmn/CEO Cendant Corp. 65 3300

Robert C. Wright Chmn/CEO NBC Universal 62 2500

Sumner Redstone CHMN/Pres/CEO Viacom 82 5807

x (Age) y (Salary) x² y² xy

56 1000 3136 1000000 56000

57 1172 3249 1373584 66804

50 1000 2500 1000000 50000

75 4509 5625 20331081 338175

58 1500 3364 2250000 87000

54 1092 2916 1192464 58968

51 1663 2601 2765569 84813

49 817 2401 667489 40033

61 1562 3721 2439844 95282

57 2164 3249 4682896 123348

55 1680 3025 2822400 92400

53 1173 2809 1375929 62169

65 3300 4225 10890000 214500

 62 2500 3844 6250000 155000

82 5807 6724 33721249 476174

Total 885 30939 53389 92762505 2000666

1. Based on the information given in the problem, determine which of the two variables of
interest is the independent variable and the dependent variable? (5 pts.)

The independent variable of the interest is age, while the dependent variable is
annual salary.

2. Develop a scatter diagram for the two variables and label which is the predictor variable ,
and which is the response variable? (10 pts.)

The predictor variable of the scatter diagram is the age, while the response
variable is the salary.

3. What does the scatter diagram developed in part (2) indicate about the relationship
between the two variables? (5 pts.)

The scatter diagram, developed in number 2, indicates that there is a strong,

positive linear relationship between the two variables, salary and age.
4. Verify your answer in (3) by calculating the correlation coefficient and interpret the
results. (10 pts.)

The correlation coefficient is 0.9507, this indicates a strong (almost perfect),

positive linear relationship between age and salary.

Formula:
CORREL(y,x) = 0.950722868

Correlation coefficient = 0.950722868. It shows a good relationship and indicates a strong

and positive association between two variables.

Sxx= 1174

Syy= 28947723.60

Sxy= 175265

r= 0.95
5. Using the Least Squares Method, calculate the regression coefficients and formulate a
model that will define the relationship between the two variables. (10 pts.)

The relapse condition is ŷ = - 6745.44 + 149.29X. The condition is given by ŷ = a + bX,

where an is the block and b or incline is the age. The model is great since the worth of R2
is 0.9038 or 90.38% of the inconstancy of compensation is made sense of by the age or
90.38% is made sense of by the model. y=mx+b

The slope that we formulated that we got from the model is 149.289 while the
interception in the model is -6745.436627.

The slope that we formulated that we got from the model is 149.2887 or 149.289 while
the interception is = - 6745.436627 or - 6745.44. So we formulated a model which is a
scatter diagram to determine the regression coefficients that will define the relationship of
the two variables.
6. Interpret the coefficients (slope & intercept) of your model. (10 pts.)

The model yields a slope of 149.29 and a negative intercept of -6745.4. A positive
slope indicates that two variables are positively related, that is, when x increases, so does
y, and when x decreases, so does y. The negative intercept does not imply that the model
is incorrectly estimated because it is dependent on the predictor/response variables
entered into this model. It is critical to evaluate the model and recheck the data based on
the predictor/response variable coefficients and statistical properties. The square root of R
square is 0.950736557, and the R square of.9039 yields a R value of 0.950736557. Since
we have a R value of.9507, the overall relationships between the variables indicate a
strong positive relationship because.9507 is closest to 1, which is a good indicator. The
summary results are shown in Table 1.1.

7. Calculate the coefficient of determination and interpretation. (5 pts.)

The square of the r-value, which is .9507, is used to calculate the coefficient of
determination. The square of the r-value in this example is.9039 (rounded off), which can
be calculated using (.950736557)2. The coefficient of determination tells us how much
the dependent variable changes when the independent variable changes. The fact
that.9039 is so near to 1 indicates that these two variables have a strong connection.
Furthermore, when we convert.9039 to a percentage, we get 90%, indicating that the
variation in the dependent variable is explained by the change in the independent
variable, implying that the two variables have a strong link. The unexplained variable, or
what we dubbed the coefficient of alienation, is 10%, which is calculated by (100% -
90%).
8. Suppose Bill Gustin is the 72-year-old chairman, president, and CEO of a major
electronics company. Predict the annual salary for Bill Gustin. (5 pts.)

Prediction of the annual salary for Bill 4003.353833 Salary ($1000) 4003353.833
Gustin

The annual salary of Bill Gustin would be

4003.353833 by calculating (149.2888 x 72 + (-
6745.4366))

The annual salary of Bill Gustin in $

would be $4,003,353

9. Suppose YOU are a CEO of a big company 10 years from now, predict your annual
salary. YOU refers to the age of anyone from the group. (5 pts.)

Prediction of the annual salary of Juan Dela Cruz 10 years from now:
➔ Age now: 20 years old
➔ Ten years from now, 30 years old
◆ -2266.773935
◆ -2266.773.935
Therefore, Ten years from now, the annual salary of Juan Dela Cruz would be
($2,266,774)