An accountant at the firm Walker and Walker believed that several traveling executives submitted unusually high travel vouchers when they returned from business trips. The accountant took a sample of 100 vouchers submitted from the past year; she then developed the following multiple regression equation relating expected travel cost (Y) to number of days on the road (X₁) and distance traveled (X₂) in miles:

= $100.00 + $48.50₁ + $0.50₂

The "Multiple R" output by Excel is 0.68.

(a) If Thomas Williams returns from a 300-mile trip that took him out of town for 5 days, what is the expected amount that he should claim as expenses?

(b) Williams submitted a reimbursement request for $1,000; what should the accountant do?

(c) Comment on the validity of this model. What is the adjusted r squared? How much variability in the travel cost is captured by the current model? Should any other variables be included to better predict the travel cost? Please list some possible independent variables.

(d) Suppose the accountant added another independent variable X₃ and the adjusted r squared became 0.55. Is this new model better than the original model? How much more variation in the travel cost is captured by the new model?