You are a new hire at Laurel Woods Real Estate which specializes in selling fore
ID: 3245716 • 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.)
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
I have used R Studio to run the given linear regressiom. On running the data, I have got the below regression equation.
Auction Price = -73060 + 0.94 Loan + 34.96 Monthly Payment - 1321 Payments Made + 0.01 X1X3
t-value corresponding to the interaction term = Coeff/SE Coef = 0.0114/0.0167 = 0.683
P for the interaction term is 0.505 which is greater than the significance level of 0.05, so we fail to reject the null hypothesis and conclude that the interaction is not significant at 0.05 significance level. So answer is no interaction.
Predictor Coef SE Coef T P Constant -73060 57180 -1.278 0.221 Loan 0.944 0.470 2.007 0.063 Monthly Payment 34.960 27.660 1.264 0.226 Payments Made -1321 1746 -0.757 0.461 X1X3 0.0114 0.0167 0.683 0.505Related Questions
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