1. XYZ Co. is studying CEO salaries to determine how to set theirs. For 26 public companies, they record 2021 Sales ($Mil) and CEO Pay ($000). The data is collected in the dataset, CEO Compensation. Open the dataset and use the data to answer the questions below.
2. Compute the correlation between Sales and CEO Pay.
3. Create two new variables, Log Sales and Log CEO Pay by taking the logarithms base 10 of the original variables. Compute the correlation between Log Sales and Log CEO Pay.
4. We have learned that the correlation coefficient is unit-free. But the correlations in a and b are not equal. Briefly explain why.
5. Fit the regression models, CEO Pay vs Sales and Log CEO Pay vs Log Sales.For both models, in your output, show the following:

• Regression statistics;
• Coefficients Table
• Normal Probability Plot of Residuals
• Residual Plot.

What do the diagnostic plots tell you about the two models?

1. XYZ had 2021 sales of $7.5 billion. They wish to set their CEO Pay based on the one of the regression models above. For each model, calculate the projected CEO Pay based on sales of $5 billion.

More specifically, XYZ wants their CEO Pay to be within the 95% confidence interval for average CEO Pay for public companies with $7.5 billion in sales. Given this, which of the models should they use to set the CEO Pay. (Consider the residual plots and the prediction output on the following page.) Briefly explain your answer.