Emily Smith decides to buy a fuel-efficient used car. Here are several vehicles

Question

Emily Smith decides to buy a fuel-efficient used car. Here are several vehicles she is considering, with the estimated cost to purchase and the age of the vehicle. Vehicle Estimated Cost Age Honda Insight $ 5,555 8 Toyota Prius $ 17,888 3 Toyota Prius $ 9,963 6 Toyota Echo $ 6,793 5 Honda Civic Hybrid $ 10,774 5 Honda Civic Hybrid $ 16,310 2 Chevrolet Prizm $ 2,475 8 Mazda Protege $ 2,808 10 Toyota Corolla $ 7,073 9 Acura Integra $ 8,978 8 Scion xB $ 11,213 2 Scion xA $ 9,463 3 Mazda3 $ 15,055 2 Mini Cooper $ 20,705 2 b. Find the correlation coefficient. **Use the Excel Command for "Correlation." Do not use Multiple R.** (Negative value should be indicated by a minus sign. Round your answer to 3 decimal places.) Coefficient of correlation c. A regression analysis was performed and the resulting regression equation is Estimated Cost = 18358 1534 age. Interpret the meaning of the slope. For each increase of 1 year in the age of the car, the estimated cost (Click to select)decreasesincreases on average by $1534. d. Estimate the cost of a five-year-old car. (Round your answer to the nearest whole number.) Five-year-old car $

Explanation / Answer

Table for the question is shown below:

Correlation coefficient is found out using the command CORREL(array1, array2) in excel.

Correlation coefficient = -0.822 ( negative correlation indicated that with the increase in age, estimated cost decreases)

Meaning of slope is, for each unit increase in age of car its estimated cost decreases by $1534

Estimated cost of 5 year old car can be found by substituting the value of age = 5 in the regression equation,

Estimated cost = 18358 - 5*1534 = 10688

Vehicle Estimated Cost Age Honda Insight 5555 8 Toyota Prius 17888 3 Toyota Prius 9963 6 Toyota Echo 6793 5 Honda Civic Hybrid 10774 5 Honda Civic Hybrid 16310 2 Chevrolet Prizm 2475 8 Mazda Protege 2808 10 Toyota Corolla 7073 9 Acura Integra 8978 8 Scion xB 11213 2 Scion xA 9463 3 Mazda3 15055 2 Mini Cooper 20705 2

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