Oil Quality and Price
Quality of Oil Is Measured in API

question 32

Essay

Oil Quality and Price
Quality of oil is measured in API gravity degrees--the higher the degrees API,the higher the quality.The table shown below is produced by an expert in the field who believes that there is a relationship between quality and price per barrel.
$$\begin{array} { | c | c | } \hline \text { Oi degrees API } & \text { Price per barrel (in \$) } \\\hline 27.0 & 12.02 \\28.5 & 12.04 \\30.8 & 12.32 \\31.3 & 12.27 \\31.9 & 12.49 \\34.5 & 12.70 \\34.0 & 12.80 \\34.7 & 13.00 \\37.0 & 13.00 \\41.0 & 13.17 \\41.0 & 13.19 \\38.8 & 13.22 \\39.3 & 13.27 \\\hline\end{array}$$ A partial Minitab output follows:
$$\begin{array}{l}\text { Dascriptive atafistics }\\\begin{array} { l l l l l } \text { Variable } & \mathrm { N } & \text { Mean } & \text { StDev } & \text { SE Mean } \\\text { Degrees } & 13 & 34.60 & 4.613 & 1.280 \\\text { Price } & 13 & 1270 & 0.757 & 0.127\end{array}\end{array}$$ $$\begin{array}{l}\begin{array} { l l } \text {Covariances }\\&\text { Degeres } & \text { Price } \\\text { Degeres }&21.281667 & \\\text { Price } &2.026750 & 0.208933\end{array}\end{array}$$ $$\begin{array}{l}\begin{array} { l l l r } \text { Rederatian Antalyis } & & \\\text { predictor } & \text { Caef } & \text { StDev } & \text { T }&\text { P} \\\text { Cunstant } & 9.4349 & 0.2867 & 32.91&0.000 \\\text { Degrees } & 0.095235 &0 .008220 & 11.59&0.000\end{array}\\\\S =0 .1314 \quad R - S q = 92.46 \% \quad R - S q ( a dj ) = 91.7 \%\end{array}$$ $$\begin{array}{l}\text { Analysis of Variance }\\\begin{array} { l l r r r } \text { Surce } & \text { DF } & \text { SS } & \text { MS } & \text { F } &\text {P}\\\text { Regeression } & 1 & 2.3162 & 2.3162 & 134.24 &0.000\\\text { Residual Error } & 11 & 0.1898 & 0.0173 & \\\text { Total } & 12 & 2.5060 & &\end{array}\end{array}$$
-{Oil Quality and Price Narrative} Plot the residuals against the predicted values $\hat { y }$ .

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Definitions:

Dividend Payout Ratio

The portion of earnings paid to shareholders in dividends, calculated as total dividends divided by net income.

External Financing Need

The additional funding required by a firm to finance its expansion or growth projects beyond what it can generate from internal operations.

External Financing Needed

The amount of funding a company must seek from outside sources to finance its planned growth or investment activities, beyond what can be funded by retained earnings or internal operations.

Retains

Refers to the portion of earnings or profits that a company decides to keep rather than distribute to shareholders as dividends, often used for reinvestment.