Question 1 Valuing a company is a challenging but essential part of finance within mergers and acquisitions. An economic analyst evaluates Not yet saved whether Total Assets have significant explanatory power in describing a company's enterprise value in manufacturing chemicals Marked out of and chemical products. The EXCEL file EnterpriseValue xisx contains Total Assets and the enterprise value of 30 companies 17.00 randomly sampled from the chemical industry. All values are measured in SAUD in million. F Flag question Research Question: "Is there a linear relationship between the Total Assets ($AUD in million) and the enterprise value (SAUD in million)?" Download the file for analysing in EXCEL. Assume the relevant assumptions for linear regression are satisfied and fit a linear regression model to predict a company's enterprise value from its Total Assets. Use your Excel output and any other information provided to answer the following questions. For each question, either choose a correct option or type a numerical value with specified number of decimal places into provided answer space. Figure 1 Figure 2 O O 260 220 Frequency Enterprise Value (SAUD in million) 180 140 O -60 -40 -20 0 20 40 60 60 70 80 90 100 110 120 Residuals Total Assets (SAUD in million)\f1. (1 mark) The slope of the least squares regression line is positive * 2. (3 marks) The validity of the statistical inference depends on how well the data approximates the assumptions of the linear model (choose the figure that goes with each statement): o To check the linear relationship between Total Assets and the enterprise value, we use Figure 2 o To check the normality of residuals, we use Figure 2 o To check the residuals in the enterprise value have a constant standard deviation across the range of Total Assets values, we use Figure 3 3. (1 mark) What else do you see in the scatter plot? B. There is one observation with a relatively large Total Assets value * 4. (1 mark) Based on your answer in Q3, describe how this problem might have occurred? D. It may be that the enterprise value varies between two sub-industries in the chemical industry. * 5. (2 marks) The absolute value of the test statistic for testing the slope of the regression line is: (3dp) with degrees of freedom equal to: 28 (integer). 6. (1 mark) The p-value for testing the slope of the regression line is less than 0.05. 7. (2 marks) Select the most appropriate conclusion to the question "Is the Total Assets a useful predictor for the enterprise value?"- A. There is a significant negative linear relationship between the enterprise value and Total Assets. B. There is not enough evidence to indicate that Total Assets is a useful predictor for the enterprise value. C. There is a significant positive linear relationship between the enterprise value and Total Assets. 8. (1 mark) The correlation is: (3dp - remember to include a negative sign if appropriate)After checking the potential outlying observation(s) evident in the scatter plot, a new regression model is fitted and the regression results are shown in the table. Answer Questions 9 to 11 based on this table. Regression results on the cleaned data set Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 87.150 16.461 5.294 0 53.432 120.869 Total Assets 1.139 0.180 6.312 0 0.769 1.508 9. (2 marks) Use the regression equation to predict the company's enterprise value with Total Assets of $91.7 AUD million: $ AUD million (3dp) 10. (1 mark) With 95% confidence, we estimate from the data that, on average, an increase in the Total Assets of $91.7 AUD million is associated with a(n) in the enterprise value10. (1 mark) With 95% confidence, we estimate from the data that, on average, an increase in the Total Assets of $91.7 AUD million is associated with a(n) in the enterprise value A. increase B. decrease C. stay the same 11. (2 mark) If the variability of Total Assets increases, the width of the 95% confidence interval will also increase (Hint: look at the formula for 95% CI for the slope). Assume that it has happened, and a new 95% confidence interval is calculated and this interval width is increased by $104 AUD million. What is the interval width after the increase? $ AUD million. (3dp)