A financial analyst engaged in business valuation obtained financial data on 71 drug companies. Let Y correspond to the price-to-book value ratio, X, correspond to the return on equity, and X2 correspond to the growth percentage. Use the accompanying data to complete parts a. through e. below. Click the icon to view the business valuation data. PLEASE RUN SPSS OR STATCRUNCH TO OBTAIN THE REQUIRED DATA TO ANSWER THE QUESTIONS BELOW! Be prepared to RUN SPSS OR STATCRUNCH in other questions in this modul - X Business Valuation Data Price/Book Value Ratio Return on Equity Growth % a. Develop a regression model to predict price-to-book-value ratio based on return on equity. 1.529 13.001 .494 Y, =0+X1; 8.262 11.883 135.617 (Round to three decimal places as needed.) 2.074 12.345 0.124 6.603 25.065 14.237 b. Develop a regression model to predict price-to-book-value ratio based on growth. 1.284 3.771 22.662 3.18 37.958 19.04 7, =+X2i 2.522 25.639 24.633 (Round to three decimal places as needed.) 5.277 19.604 1.683 2.373 22.802 49.819 c. Develop a regression model to predict price-to-book-value ratio based on return on equity and growth. 7.659 69.718 36.635 Y, = [+X1 +X21 0.494 3.787 41.099 2.54 9.166 28.961 (Round to three decimal places as needed.) 7.549 29.126 51.964 5.232 25.053 d. Compute and interpret the adjusted r for each of the three models. 2.181 29.268 23.882 Start with the part (a) model. 4.876 31.468 9.533 2.109 14.728 18.433 The adjusted r shows that % of the variation in is explained by correcting for the number of independent variables in the model. 4.019 11.929 39.152 (Round to one decimal place as needed.) 1.898 14.169 39.533 1.561 14.104 27.012 Compute and interpret the adjusted r for the part (b) model. 2.037 14.894 13.241 4.975 20.684 17.194 The adjusted r shows that % of the variation in is explained by correcting for the number of independent variables in the model. 2.322 14.912 15.934 (Round to one decimal place as needed.) 2.101 5.58 16.682 2.884 11.264 8.275 Compute and interpret the adjusted r for the part (c) model. 1.823 16.266 18.231 5.466 23.948 16.763 The adjusted r shows that % of the variation in is explained by correcting for the number of independent variables in the model. 4.734 14.661 46.456 (Round to one decimal place as needed.) 2.512 6.226 33.995 1.734 8.495 e. Which of these three models do you think is the best predictor of price-to-book-value ratio? 19.044 8.342 38.889 15.086 The model from is the best predictor of price-to-book-value ratio because it has the value of 2.26 15.091 25.178 2.907 19.799 0.304 7.542 18.355 3.304 3.265 20.719 9.46 2.819 34.616 7.072 2.416 15.441 9.515 1.232 10.303 4.72 3.061 23.482 4.088 10.303 91.469 13.319 2.119 1.567 15.965 1.651 9.455 5.738 2.087 19.342 0.103 7.175 5.076 102.694
