Determine an equation which estimates salary?

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 61555.355 66701.901 .923 .361
Percentage in grade 10 3076.177 1031.526 .395 2.982 .004
a. Dependent Variable: Salary

Salary (Y) = 61555.355 + 3076.177*Percentage in grade 10

What would be the salary of MBA graduate if percentage in grade 10 is 80%?

Salary = 61555.355 + 3076.177*80 = 307649.515

What would be the salary of MBA graduate if percentage in grade 10 is 40%?

Salary = 61555.355 + 3076.177*40 = 184602.435

Interpretation:

For every 1 percentage increase in grade 10, the salary of the MBA student increase at the rate of
3076.177 on an average.

1. Independent variable is to be statistically significant -> Concept of Verifying Regression

coefficient
H0: There is no relationship between X (Percentage in grade 10) and Y(Salary)
H1: There is a relationship between X (Percentage in grade 10) and Y(Salary)
H0: β1=0
H1: β1 ≠ 0
P-value < 0.05, reject Null Hypothesis, which means, there is a relationship between
X (Percentage in grade 10) and Y(Salary)

2. Overall Equation is statistically significant.

Salary (Y) = 61555.355 + 3076.177*Percentage in grade 10

H0: There is no statistically significant relationship between Y(Salary) and Percentage any of
the explanatory variables.
H1: Not all regression coefficients are zero
 ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 45078257910.04 1 45078257910.04 8.893 .004b
8 8
Residual 243302058889.9 48 5068792893.541
52
Total 288380316800.0 49
00
a. Dependent Variable: Salary
b. Predictors: (Constant), Percentage in grade 10

Since the p-value is less than α, Reject H0, which means that, the regression coefficient is not equal
to zero and the overall model is significant.

Coefficient of Determination(R-Square)

Salary (Y) = 61555.355 + 3076.177*Percentage in grade 10

Variation explained by independent variable to determine the change in dependent variable.

Model Summary
Adjusted R Std. Error of the
Model R R Square Square Estimate
1 .395a .156 .139 71195.456
a. Predictors: (Constant), Percentage in grade 10

R-Square = 0.156 = 15.6% variation in Salary is determined by Percentage in grade 10

Square root of R

Fulfilling the assumptions of simple Linear Regression:

1. Linearity (Yes)
2. Homoscedasticity (this will fulfil when the scatterplot doesn’t take funnel shape)
3. Independence (Yes)
4. Normality

Predicted values

Residual values – actual values

Independent variable: Age

Dependent variable: Cost of treatment

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 189010.378 31067.222 6.084 .000
Age 323.642 778.396 .067 .416 .680
a. Dependent Variable: CostofTreatment

Cost of Treatment (Y) = 189010.378 + 323.642*Age

1. Independent variable is to be statistically significant -> Concept of Verifying Regression

coefficient
H0: There is no relationship between X (Age) and Y (Cost of Treatment)
H1: There is a relationship between X (Age) and Y (Cost of Treatment)
 H0: β1=0
H1: β1 ≠ 0
P-value > 0.05, accept Null Hypothesis, which means, there is no relationship between
X (Age) and Y (Cost of Treatment)

2. Overall Equation is statistically significant.

Cost of Treatment (Y) = 189010.378 + 323.642*Age

H0: There is no statistically significant relationship between Y (Cost of treatment) and age
any of the explanatory variables.
H1: Not all regression coefficients are zero

ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 1535787003.152 1 1535787003.152 .173 .680b
Residual 337587122408.6 38 8883871642.332
32
Total 339122909411.7 39
84
a. Dependent Variable: CostofTreatment
b. Predictors: (Constant), Age

Since the p-value is greater than α, Accept H0, which means that, the regression coefficient is equal
to zero and the overall model is not significant.

Coefficient of Determination(R-Square)

Cost of Treatment (Y) = 189010.378 + 323.642*Age

Variation explained by independent variable to determine the change in dependent variable.

Model Summary
Adjusted R Std. Error of the
Model R R Square Square Estimate
1 .067a .005 -.022 94254.29243452
218000
a. Predictors: (Constant), Age

R-Square = 0.005 = 0.5% variation in Cost of Treatment is determined by Age