In order to study the relationship of advertising and capital investment with corporate profits, the following data, recorded in units of $100,000, were collected for 10 medium-sized firms in the same year. The variable y represents profit for the year, x1 represents capital investment, and x2 represents advertising expenditures.

a. Using the model
E(y) = β0 + β1x1 + β2x2
and an appropriate computer software package, find the least-squares prediction equation for these data.
b. Use the overall F-test to determine whether the model contributes significant information for the prediction of y. Use a = .01.
c. Does advertising expenditure x2 contribute significant information for the prediction of y, given that x1 is already in the model? Use a = .01.
d. Calculate the coefficient of determination, R2. What percentage of the overall variation is explained by the model?

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