The variable rdintens is expenditures on research and development (R&D) as a percentag...

(ii)

Since this is a one-tailed test, the hypothesis is stated below:

The calculation of t-statistic is as follows:

Thus, calculated value is 1.486

The critical value of one test t-statistic at 5% level of significance at 29 degrees of freedom is 1.699

Since the critical value is more than the calculated value, do not reject the null hypothesis. It means that the R&D intensity does not change with sales at 5% level of significance.

But the critical value of one test t-statistic at 10% level of significance at 29 degrees of freedom is 1.311

Since the critical value is less than the calculated value, reject the null hypothesis. It means that the R&D intensity increase with sales at 10% level of significance.

(iii)

The coefficient of profits as a percentage of sales shows the effect of increase in profits as a percentage of sales on the R&D.

It means a unit change in profmarg will lead to 0.05 unit change in R&D

In other words, 1% increases in profmarg leads to 0.05% increase in R&D

Thus, it is not economically large.

(iv)

To know whether profmarg has significant effect on rdintens or not perform the t-test and evaluate the result at 5% and 10% level of significance.

The hypothesis is stated below:

The calculation of t-statistic is as follows:

Thus, calculated value is 1.087

The critical value of one tail test t-statistic at 5% and 10% level of significance at 29 degrees of freedom is 1.699 and 1.311 respectively.

Since the calculated value is smaller than both 5% and 10% significance level, therefore we do not reject the null hypothesis.

It means that profmarg has no significant effect on rdintens at 5% and 10% level of significance.