Cash-Dividend and After-Tax Profits

 Complete Problem 3.14 of Chapter 3 and submit to your instructor. Complete your assignment in Excel and submit your completed Excel workbook to your Instructor for grading.

3.14. Table 3-6 gives data on X (net profits after tax in U.S. manufacturing industries [$, in millions]) and Y (cash dividend paid quarterly in manufacturing industries [$, in millions]) for years 1974 to 1986.

  1. What relationship, if any, do you expect between cash dividend and after-tax profits?
  2. Plot the scattergram between Y and X.
  3. Does the scattergram support your expectations in part (a)?
  4. If so, do an OLS regression of Y on X and obtain the usual statistics.
  5. Establish a 99% confidence interval for the true slope and test the hypothesis that the true slope coefficient is zero; that is, there is no relationship between dividend and the after-tax profit.

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