Question

In: Finance

You must use Excel for solving all the problems In problem 13.9 on page 501, an...

You must use Excel for solving all the problems

In problem 13.9 on page 501, an agent for real estate company wanted to predict the monthly rent for one-bedroom apartments, based on the size of the apartment. The data are stored in rentsliverspring. Use the results of that problem.

a. at the 0.05 level of significance, is there evidence of a linear relationship between the size of the apartment and the monthly rent?

b. Construct at 95% confidence interval estimate of the population slop b1.

Rentsliverspring data:

Size (Square feet) Rent ($)
524 1110
616 1175
666 1190
830 1410
450 1210
550 1225
780 1480
815 1490
1070 1495
610 1680
835 1810
660 1625
590 1469
675 1395
744 1150
820 1140
912 1220
628 1434
645 1519
840 1105
800 1130
804 1250
950 1449
800 1168
787 1224
960 1391
750 1145
690 1093
840 1353
850 1530
965 1650
1060 1740
665 1235
775 1550
960 1545
827 1583
655 1575
535 1310
625 1195
749 1200
634 1185
641 1444
860 1385
740 1275
593 1050
880 1650
895 1340
692 1560

Solutions

Expert Solution

Solution :

Regression analysis is performed on the excel.

Part A )

At 95% confidence interval we compare the value of significance

If significance value is < 0.05 then there is a clear evidence of a linear relationship

Here sig value is 0.0134 < 0.05

So we can say that Monthly rent is dependent upon the size of the apartment

Part B )

Construct at 95% confidence interval estimate of the population slop b1

Calculated in the excel sheet

Interval :

Lower bound :0.1068

Upper bound 0.8794

jeff jeffy answered 2 years ago
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