Thirty-Four Observations of a Dependent Variable (Y) and Two Independent

question 27

Essay

Thirty-four observations of a dependent variable (y) and two independent variables resulted in an SSE of 300. When a third independent variable was added to the model, the SSE was reduced to 250. At a 5% level of significance, determine if the third independent variable contributes significantly to the model.

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Definitions:

Deferred Income Taxes

Tax liabilities that arise due to timing differences between the recognition of income and expenses in the financial statements and their recognition in the tax returns, deferred to future periods.

Life Insurance Proceeds

The amount of money paid out to the beneficiary of a life insurance policy upon the death of the insured or at the policy's maturity.

Deferred Tax Liability

An accounting term representing a tax obligation that a company owes but is allowed to pay at a future date.

Pretax Accounting Income

Income earned by a business before taxation has been deducted, as recorded in its financial accounts.