You are a new hire at Laurel Woods Real Estate which specializes in selling fore
ID: 3157192 • Letter: Y
Question
You are a new hire at Laurel Woods Real Estate which specializes in selling foreclosed homes via public auction. Your boss has asked you to use the following data (mortgage balance, monthly payments, payments made before default, and final auction price) on a random sample of recent sales in order to estimate what the actual auction price will be. Add a new variable that describes the potential interaction between the loan amount and the number of payments made.
Determine the regression equation. (Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign.)
Auction Price = + Loan + Monthly Payment +
Payments Made + X1X3
Complete the following table. (Round your answers to 3 decimal places. Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.)
Compute the t-value corresponding to the interaction term. (Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.)
. So we conclude there is .
You are a new hire at Laurel Woods Real Estate which specializes in selling foreclosed homes via public auction. Your boss has asked you to use the following data (mortgage balance, monthly payments, payments made before default, and final auction price) on a random sample of recent sales in order to estimate what the actual auction price will be. Add a new variable that describes the potential interaction between the loan amount and the number of payments made.
Explanation / Answer
Regression Equation
auction price = -143877 + 1.73954 Loan + 14.3786 Monthly Payments + 1506.57
payments made - 0.013857 Loan*payments made
Coefficients
Term Coef SECoef T P
Constant -143877 48766.5 -2.95032 0.010
Loan 2 0.4 4.34691 0.001
Monthly Payments 14 21.6 0.66530 0.516
payments made 1507 1455.2 1.03528 0.317
Loan*payments made -0 0.0 -0.99625 0.335
the t-value corresponding to the interaction term=-1 (rounded to 2 decimal places)
here the anova output is as follows
Analysis of Variance
Source DF Seq SS Adj SS Adj MS F P
Regression 4 4596799292 4596799292 1149199823 11.9157 0.000148
Loan 1 4476791582 1822363575 1822363575 18.8956 0.000575
Monthly Payments 1 10761051 42688152 42688152 0.4426 0.515960
payments made 1 13525699 103368336 103368336 1.0718 0.316943
Loan*payments made 1 95720959 95720959 95720959 0.9925 0.334932
Error 15 1446657552 1446657552 96443837
Total 19 6043456844
As p value corresponding to interaction is 0.334932 so we accept the null hypothesis that the interaction effect is not significant on the light of the given data.
For the whole analysis we can use Minitab by the following path
Stat-Regression-general regression
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