Investment

Is an MBA a golden ticket? Pursuing an MBA is a major personal investment. Tuition and expenses associatedu with business school programs are costly, but the high costs come with hopes of career advancement and high salaries. A prospective MBA student would like to examine the factors that impact starting salary upon graduation and decides to develop a model that uses program peryear tuition as a predictor of starting salary. Data were collected for 37 full-time MBA programs offered at private universities. The data are stored in FTMBA .

Source: Data extracted from “U.S. News Business School Compass,” available at premium.usnews.com/best-graduate-schools/top-business-schools/mba-rankings.

a. Construct a scatter plot.

b. Assuming a linear relationship, use the least-squares method to determine the regression coefficients b0 and b1.

c. Interpret the meaning of the slope, b1, in this problem.

d. Predict the mean starting salary upon graduation for a program that has a per-year tuition cost of $50,450.

e. What insights do you gain about the relationship between program per-year tuition and starting salary upon graduation?

Solution:

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