SCENARIO 12-11
a Computer Software Developer Would Like to Use

question 16

True/False

SCENARIO 12-11
A computer software developer would like to use the number of downloads (in thousands) for the trial version of his new shareware to predict the amount of revenue (in thousands of dollars) he can make on the full version of the new shareware.Following is the output from a simple linear regression
along with the residual plot and normal probability plot obtained from a data set of 30 different sharewares that he has developed:
$\begin{array}{lr}{\text { Regression Statistics }} \\\hline \text { Multiple R } & 0.8691 \\\hline \text { R Square } & 0.7554 \\\hline \text { Adjusted R Square } & 0.7467 \\\hline \text { Standard Error } & 44.4765 \\\hline \text { Observations } & 30.0000 \\\hline\end{array}$

$\text { ANOVA }$
$\begin{array}{|l|r|r|r|r|r|}\hline &\text { df } & \text { SS } & \text { MS } & F & \text { Significance } F \\ \hline \text { Regression } & 1 & 171062.9193 & 171062.9193 & 86.4759 & 0.0000 \\\hline \text { Residual } & 28 & 55388.4309 & 1978.1582 & & \\\hline \text { Total } & 29 & 226451.3503 & & \\\hline\end{array}$





Simple Linear Regression 12-41
-Referring to Scenario 12-11, the homoscedasticity of error assumption appears to have been violated.

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Definitions:

Goodwill Method

An accounting approach used to assess the monetary value of goodwill in the merging or acquisition of businesses.

Capital Balance

The amount of funds contributed by owners or shareholders, plus retained earnings and minus any distributions to owners or shareholders.

Independent Appraisal

The process of determining the value of an asset, property, or company by a professional appraiser who is not influenced by any party involved in the transaction.

Retires

The process of removing an asset from the company’s balance sheet because it has been disposed of or is no longer in use.