Question

The commercial division of a real estate firm is conducting a regression analysis of the relationship between x, annual gross rents (in thousands of dollars), and y, selling price (in thousands of dollars) for apartment buildings. Data were collected on several properties recently sold and the following computer output was obtained. The regression equation is Y=20.0 + 7.21 X Predictor Constant Coef 20.000 7.210 SE Coef 3.2213 1.3625 T 6.21 5.29 Analysis of Variance SOURCE Regression Residual Error Total SS 41,587.4 41,587.4 51,984.5 a. How many apartment buildings were in the sample? b. Write the estimated regression equation (to 2 decimals if necessary). c. Use the t statistic to test the significance of the relationship at a .05 level of significance. What is the p-value? Use Table 1 of Appendix B.

Answer 1

a)number of buildings =totaldf+1 =8+1 =9

b)

yhat =20+7.21x

c) p value =0.0011 (p value <0.01)

conclusion: there is a relationship between two variables

d)

F test statistic =(MSR/MSE)=(41587.4/1)/((51984.5-41587.4)/7)=28.00

p value =0.0011 (p value <0.01)

conclusion: there is a relationship between two variables

e)

predicted value =20+7.21*60 =452.6 thousands