NPV = net present value

NPV= net present value (valeur actuelle nette VAN)

IRR( rate of return)= TRI (taux interne de rentabilité)

Paybcak period= the period when an investor can pay back its investement (delai de recupération des capitaux investis)

See textbook exemple 6.2 p 165

Io=250m

CF=35m pp( payback period) =250/35=7,14 years 1. Re-estimate the model and re-submit the results

8.

Parameter Estimates

Variable Label DF Parameter

Estimate Standard

Error t Value Pr > |t| Interpretation

Intercept Intercept 1 -245.46357 177.44473 -1.38 0.1744

X1 X1 1 -0.01063 0.00178 -5.96 <.0001 Negative : makes sense as the higher the GDP is, the less people enroll in the Army.

lnX2 lnX2 1 0.02614 0.02301 1.14 0.2629 Negative : makes sense as the higher the revenue per capita, the less people enroll in the army.

X3 X3 1 0.00014026 0.00018724 0.75 0.4583 Positive : makes sense as the more population the more people enroll.

X4 X4 1 2.10008 155.23546 0.01 0.9893 Dummy

X5 X5 1 -0.00373 0.00576 -0.65 0.5210 Negative : makes no sense the more high school dropouts, the less people enroll.

X6 X6 1 -56.70025 94.74215 -0.60 0.5530 Dummy

X7 X7 1 0.00052594 0.00029893 1.76 0.0864 Negative : does not make sense, obesity does not change.

X8 X8 1 0.00199 0.00058452 3.41 0.0015 Positive : makes sense as the more recruitable population, the more people enroll.

X9 X9 1 -0.00381 0.00066159 -5.76 <.0001 Negative : does not make sense

X10 X10 1 -0.00013686 0.00011653 -1.17 0.2473 Negative : gun possessors does not make sense.

We have encountered problems with the variables X5,X7,X9 and X10 because the correlaction betwwen each previous variable and Y( the number of recruits in the US army) does not go the way we were expecting. Answering the next question whith each variable will underline these problems .

2. Provide a thorough interpretation of all of your estimated coefficients (parameter estimates). Pay attention to the units of measurements and be as specific as possible !

-for every one dollar increase in the GDP per inhabitant(X1), the number of recruits in the US army decrease by 0,01063 on average and holding constant the impact of other variables (X2 through X10)

-for every one percent increase in average revenue in capital (X2), the number of recruits in the US army (soldier recruted) goes up by (0.02614 times 0,001) points on average and holding constant impact of other variables (X1,X3 through X10)

-for every unit increase in the state population (X3),the number of recruits in the US army increase by 0.00014026 on average and holding constant

...