Assume that there is a positive linear correlation between the variable R(return rate in percent of a financial investment) and the variable t(age in years of the investment) givenby the regression equation R=2.5t+5.3.(a) Without further information, can we assume there is a cause and effect relationship between thereturn rate and the age of the investment?(b) If the investment continues to grow at a constant rate, what is the expected return rate when theinvestment is 7 years old?(c) If the investment continues to grow at a constant rate, how old is the investment when the returnrate is 32.8%?

Positive linear correlation:- It is the relationship between two variables where an increase in the…

Answered: Assume that there is a positive linear…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Assume that there is a positive linear correlation between the variable R (return rate in percent of a financial investment) and the variable t(age in years of the investment) given by the regression equation R= 2.5t+5.3.