Develop a model to predict the selling price of homes based on assessed value. A sample of 30 recently sold single family houses in a small city is selected to study the relationship between selling price ( in $ thousands) and assessed value ( in $ thousands). The houses in the city were reassessed at full value one year prior to the study.
a. Perform a residual analysis on your results and evaluate the regression assumptions. (Use Regression in Excel->Data -> Analysis-> Data Analysis Tools, to perform this analysis).
b. Construct a scatter plot and, assuming a linear relationship, use the least squares method to compute the regression coefficients b0 and b1 (Use the results generated in part a, to find b0 and b1).
c. Interpret the meaning of the Y intercept, b0, and the slope, b1, in this problem.
Homework #8
Due: 11:55 pm on Thursday, November 6, 2014
Reading:
Chapter 13 of textbook
Question
1) (same as Problem 13.76 parts a through f only - page 515)
You want to develop a model to predict the selling price of homes based on assessed value. A sample of 30 recently sold single family houses in a small city is selected to study the relationship between selling price ( in $ thousands) and assessed value ( in $ thousands). The houses in the city were reassessed at full value one year prior to the study.
a. Perform a residual analysis on your results and evaluate the regression assumptions. (Use Regression in Excel->Data -> Analysis-> Data Analysis Tools, to perform this analysis).
b. Construct a scatter plot and, assuming a linear relationship, use the least squares method to compute the regression coefficients b0 and b1 (Use the results generated in part a, to find b0 and b1).
c. Interpret the meaning of the Y intercept, b0, and the slope, b1, in this problem.
d. Use the prediction line developed in (a) to predict the selling price for a house whose assessed value is $ 170,000.
e. Determine the coefficient of determination, r2, and interpret its meaning in this problem (Use the results generated in part a, to find r2).
f. At the 0.05 level of significance, is there evidence of a linear relationship between selling price and assessed value (Use the results generated in part a to answer this question)?