A realtor wants to know how the square footage of a home affects the value of th

Question

A realtor wants to know how the square footage of a home affects the value of the home. She has data from homes that have been sold recently and she gathers information on square footage and home values (in 1,000s -so a $250,000 home would be listed as 250). She uses excel to run a regression analysis. The following is the output: ) SUMMARY OUTPUT Multiple R R Square Adjusted R Square Standard Error Observations 0.932032038 0.868683721 0.860959233 26.10396221 19 ANOVA sS MS 1 76631.07157 76631.07157 112.4584348 6.50449E-09 Regression Residual Total 17 11584.08633 681.4168429 18 88215.15789 Coefficients Standard Error tStot P-volue Lower 95% Upper 95% 51.42146543 16.52840667 3.111096336 0.006351667 16.54957556 0.008224256 10.60464213 6.50449E-09 86.2933553 Intercept Finished Sq Feet 0.08721529 What is the regression equation? (3 points) How are these two variables correlated? (3 points) What is the best estimate for the value of a home that is 1300 square feet? (3 points)

Explanation / Answer

From the given output,

Regression equation: y = 51.42 + 0.09x

Correlation: r = 0.867 which indicates that there is a strong positive linear correlation between square footage and value of the home.

Best estimate: x = 1300,

y = 51.42 + 0.09 (1300)

y = 168.42

Hence,

The estimated cost of 1300 square feet will be $168420

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