# Local Computer Shop

Question

The   following data represent the number of flash drives sold per day at a local   computer shop and   their prices.  Price Units Sold   34 3   36 4   32 6   35 5   30 9   38 2   40 1

a. Develop an estimated regression equation with price as the independent variable.

b. Compute the coefficient of determination and comment on the strength of relationship between price and units sold.

c. Verify that the equation is significant at α= 0.01.

d. Predict the number of units sold at a price of \$42.

Question

You wish to evaluate a project requiring an initial investment of \$45,000 and having a useful life of 5 years. What minimum amount of annual cash inflow do you need if your firm has an 8% cost of capital? If the project is forecast to earn \$12,500 per year over the next 5 years, what is its IRR? Is the project acceptable?

Question

Recall that “very satisfied” customers give the XYZ-Box video game system a rating that is at least 42. Suppose that the manufacturer of the XYZ-Box wishes to use the random sample of 65 satisfaction ratings to provide evidence supporting the claim that the mean composite satisfaction rating for the XYZ-Box exceeds 42.

a: Letting μ represent the mean composite satisfaction rating for the XYZ-Box, set up the null hypothesis H0 and the alternative hypothesis Ha needed if we wish to attempt to provide evidence supporting the claim that μ exceeds 42.

b: The random sample of 65 satisfaction ratings yields a sample mean of x¯ = 42.954. Assuming that s equals 2.64, use critical values to test H0 versus Ha at each of α = .10, .05, .01, and .001.

c: Using the information in part b, calculate the p-value and use it to test H0 versus Ha at each of α = .10, .05, .01, and .001.

d How much evidence is there that the mean composite satisfaction rating exceeds 42?

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