CK-12 Probability and Statistics - Advanced

http://www.ck12.org Chapter 9. Regression and Correlation

TABLE9.8:(continued)

Year Investment with 5% Each Year

1910 163

1920 265

1930 432

1940 704

1950 1147

1960 1868

1970 3043

1980 4956

1990 8073

2000 13150

2010 21420

If we graphed these data points, we would see that we have an exponential growth curve.

Say that we wanted to fit a linear regression line to these data. First, we would transform these data using logarithmic
transformations.

TABLE9.9: Account growth data and values after a logarithmic transformation.

Year Investment with 5% Each Year Log of amount

1900 100 2

1910 163 2. 211893

1920 265 2. 423786

1930 432 2. 635679

1940 704 2. 847572

1950 1147 3. 059465