If you have not already installed the nnet and caret packages, install them now. Download the data files for this chapter from the book's website and place the banknote-authentication.csv file in your R working directory. We will use class as our target or outcome variable and all the remaining variables as predictors. Using neural networks requires all the independent/predictor variables to be numeric and the dependent variable or outcome to be 0 - 1. However, the nnet function does all the work of generating dummies (contrasts) and correctly handles categorical outcome variables.