Question

Exercise 14-12 (LO14-7)

A real estate developer wishes to study the relationship between the size of home a client will purchase (in square feet) and other variables. Possible independent variables include the family income, family size, whether there is a senior adult parent living with the family (1 for yes, 0 for no), and the total years of education beyond high school for the husband and wife. The sample information is reported below.

Family		Square Feet		Income (000s)		Family Size		Senior Parent		Education
1		2,300		60.8		2		0		4
2		2,300		68.4		3		1		6
3		3,400		104.5		3		0		7
4		3,360		89.3		4		1		0
5		3,000		72.2		4		0		2
6		2,900		113		2		1		10
7		4,100		125.4		5		0		6
8		2,250		89.6		3		0		8
9		4,200		133		5		0		2
10		2,800		98		3		0		6

1. Develop an appropriate multiple regression equation using stepwise regression. (Use Excel data analysis and enter number of family members first, then their income and delete any insignificant variables. Leave no cells blank - be certain to enter "0" wherever required. R and R2 adj are in percent values. Round your answers to 3 decimal places.)

1. Develop an appropriate multiple regression equation using stepwise regression. (Use Excel data analysis and enter number of family members first, then their income and delete any insignificant variables. Leave no cells blank - be certain to enter "0" wherever required. R and R2 adj are in percent values. Round your answers to 3 decimal places.)

Step	1	2
Constant
Family Size
t-statistic
p-value
Income
t-statistic
p-value
S
R-Sq
R-Sq(adj)

2. Select all independent variables that should be in the final model. (You may select more than one answer. Single-click the box with the question mark to produce a check mark for a correct answer and double-click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

• Senior parent
• Square feet
• Family size
• Income
• Education

Answer 1

Please find the solution below:

Part A:

The analysed parameters are shown below:

Constant	886.09
Family Size	138.46
T - Statistic	0.815
P - Value	0.452
Income	22.22
T - Statistic	3.56
P - Value	0.016
S	-26.13
R - Squared	90.6%
R - Squared (adjusted)	83.16%

All the parameters are taken from the Excel output...

Part B:

Here variables are as follows:

1) Independent Variables: Family Size, Income, Senior Parent and Education.

2) Dependent Variable: Square Feet.

End of the Solution...