The following table shows the mean annual percent return on capital (profitability) and the mean annual percentage sales growth for eight aerospace and defense companies.

a. Compute the correlation coefficient. Conduct a test of hypothesis to determine if it is reasonable to conclude that the population correlation is greater than zero. Use the .05 significance level.
b. Develop the regression equation for profitability based on growth. Can we conclude that the slope of the regression line is negative?
c. Use a software package to determine the residual for each observation. Which company has the largestresidual?

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Company Alliant Techsystems Boeing General Dynamics Honeywell L-3 Communications Northrop Grumman Rockwell Collins United Technologies Profitability 23.1 13.2 24.2 11.1 10.1 10.8 27.3 20.1 Growth 8.0 15.6 31.2 2.5 35.4 6.0 8.7 3.2