An insurance company analyst is interested in analyzing the dollar value of dama

Question

An insurance company analyst is interested in analyzing the dollar value of damage in automobile accidents. She collects data from 115 accidents, and records the amount of damage as well as the age of the driver. The results of her regression analysis are listed below. What would be the dollar value of an accident involving a 25-year-old driver? Regression Statistics Multiple R R Square Adjusted R Square Standard Error 5652.090 0.187 0.035 0.026 ations 15.000 ANOVA AMS FSignificance Regression Residual Total 130433116.219 130433116.219 4.083 0.046 113 3609911959.868 31946123.539 114 3740345076.087 Coefficient Standard Error tStat P-value Intercept Age 6.987 2.021 10725.802 1535.215 0.000 0.046 69.964 34.625 O A $11,836.56 B. $10,795.47 $13,37258 $12,474.90

Explanation / Answer

Solution:

General equation of linear regression is given as below:

Y = 0 + 1X

Where, 0 is y-intercept and 1 is slope of the regression equation.

From the given regression output, the regression equation is given as below:

Damage value in dollar = 10725.802 + 69.964*Age

We are given

Age = 25

Damage value in dollar = 10725.802 + 69.964*25

Damage value in dollar =$12474.902

Correct Answer: D. $12,474.90

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