Actor Steven Seagal has demanded an exorbitant salary to star inthe movie, “The Expendables, Part 4”. One analystthinks that the overall Rotten Tomatoes score of a movie determinesits ultimate earnings. Another analyst thinks that Seagal’spresence alone will boost earnings, regardless of the quality ofthe movie. To test both of these theories, thefollowing data is collected for six action movies:

Earnings (millions)	Rotten Tomatoes Rating	With Seagal (1 = yes, 0 = no)
55	80	0
10	15	0
72	92	1
66	71	1
14	20	0
22	41	1

A multiple regression is performed and these are theresults:

SUMMARY OUTPUT

Regression Statistics
Multiple R	0.67
R Square	0.85
Adjusted R Square	0.70
Standard Error	19.07
Observations	10.00

	Coefficients	Standard Error
Intercept	4.23	7.41
Rotten Tomatoes Rating	0.80	0.14
With Seagal (1 = yes, 0 = no)	3.35	8.32

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3. Determine the statistical significance of the twoindependent variables. Assume a t-statistic with an absolutevalue greater than 2 is statistically significant.

Show your work/thought process:

a) Rotten Tomatoes ranking -

b) With Seagal -

4. a) Manually calculate the Sum of Squared Errors forthis model.

Show your work/thought process:

b) The coefficient on the “With Seagal” variable is 3.35. Explain what this means in simple language.

c) Assume that Seagal will star in “The Expendables, Part4”, and that pre-release audiences give the movie a Rotten Tomatoesrating of 52. Predict how much money the movie will earn.