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In: Statistics and Probability

The table below contains information on 48 houses: the value of the house and the amount of rental income in a year that the house brings in ("Capital and rental," 2013).

 

The table below contains information on 48 houses: the value of the house and the amount of rental income in a year that the house brings in ("Capital and rental," 2013).

Table: Data of House Value versus Rental

Value

Rental

Value

Rental

Value

Rental

Value

Rental

81000

6656

77000

4576

75000

7280

67500

6864

95000

7904

94000

8736

90000

6240

85000

7072

121000

12064

115000

7904

110000

7072

104000

7904

135000

8320

130000

9776

126000

6240

125000

7904

145000

8320

140000

9568

140000

9152

135000

7488

165000

13312

165000

8528

155000

7488

148000

8320

178000

11856

174000

10400

170000

9568

170000

12688

200000

12272

200000

10608

194000

11232

190000

8320

214000

8528

208000

10400

200000

10400

200000

8320

240000

10192

240000

12064

240000

11648

225000

12480

289000

11648

270000

12896

262000

10192

244500

11232

325000

12480

310000

12480

303000

12272

300000

12480

Solutions

Expert Solution

Question 1 options:

The table below contains information on 48 houses: the value of the house and the amount of rental income in a year that the house brings in ("Capital and rental," 2013).

Table: Data of House Value versus Rental

Value

Rental

Value

Rental

Value

Rental

Value

Rental

81000

6656

77000

4576

75000

7280

67500

6864

95000

7904

94000

8736

90000

6240

85000

7072

121000

12064

115000

7904

110000

7072

104000

7904

135000

8320

130000

9776

126000

6240

125000

7904

145000

8320

140000

9568

140000

9152

135000

7488

165000

13312

165000

8528

155000

7488

148000

8320

178000

11856

174000

10400

170000

9568

170000

12688

200000

12272

200000

10608

194000

11232

190000

8320

214000

8528

208000

10400

200000

10400

200000

8320

240000

10192

240000

12064

240000

11648

225000

12480

289000

11648

270000

12896

262000

10192

244500

11232

325000

12480

310000

12480

303000

12272

300000

12480

1. Which of the two scatter plots displayed in the image above the problem script correctly depicts rental income as a function of house value?

Enter letter corresponding to correct plot

2. Use technology to determine regression equation between house value and rental income.

Enter regression equation in the format as follows:

y^=a+bx

with slope rounded to nearest thousandth and y-intercept value rounded to nearest integer. Examples of correctly entered answers:

y^=-4210+.348x

y^=67553-1.242x

Linear regression equation calculator:

Correlation and Linear Regression Calculator Applet

3. Use the regression equation to find the rental income from a house worth $230,000

Enter amount to nearest dollar; do not include dollar sign, commas, or units of measure

4. Use the regression equation to find the rental income from a house worth $400,000

Enter amount to nearest dollar; do not include dollar sign or units of measure

5. Which rental income that you calculated do you think is closer to the true rental income?

A. $10884, since house value producing this annual rental income would fall within range of house value data (rental income value is interpolated)

B. Both calculations are equally accurate since they are calculated using the same regression equation

C. $14964, since annual rental income is extrapolated

Enter letter corresponding to correct answer

Answers

1. Plot A describes rental income as a function of house value, as in a graph we put the 'independent factor' at the X axis, and the dependent factor on the Y axis.

2. Using MINITAB we have calculated the regression equation :

  

One can use scientific calculator or any other tehnology.

3. putting x=230000 in the above equation, we get the desired rental value as 10884

4.similarly rent for house value 400000 is : 14964

orchestra answered 2 years ago
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