1. A developer who specializes in summer cottage property is considering purchasing a large tract of land adjoining a lake. The current owner of the tract has already subdivided the land into separate building lots and has prepared the lots by removing some of the trees. The Developer wants to forecast the value of each lot. From previous experience, she knows that the most important factors affecting the price of the lot are size (lot size), number of mature trees (Trees), and distance to the lake (Distance). From a nearby area, she gathers data for 60 recently sold lots. These data are stored in Devloper.xls.
(a) Perform a multiple regression in Excel and provide excel output for the regression model = βo + βo(Lot size) + βo(Trees) + βo(Distance) + ∈
(b) Write down the equation for regression line.
(c) What is the standard error of estimate? Interpret its value.
(d) What is the coefficient of determination? What does this statistic tell you?
(e) What is the coefficient of determination, adjusted for degrees of freedom? Why does this value differ from the coefficient of determination? What does this tell you about the model?
(f) Test the overall utility of the model. What does the p-value of the test statistic tell you?
(g) Interpret each of the coefficients.
(h) Test to determine whether each of the independent variables is linearly related to the price of the lot.