Question 1:
The state of Pennsylvania is attempting to predict their revenue from the state income tax. The dependent variable is the amount of revenue from the state income tax in millions of dollars.
Independent variables
X1 = Time beginning in 1950 (coded as 1)
X2 = Unemployment rate (percentage unemployed) in Pennsylvania
Interpret the following regression equation including the intercept and all variables. Are the independent variables and the intercept statistically significant? Explain R2
Probability
Intercept 507 .002
b X1 89.4 .001
b X2 -63.4 .01
R2 = .99
Y = 507 + 89.4X1 – 63.4X2
Y = Predicted Tax Revenues in Millions of Dollars
Question 2:
The city of Hazleton is faced with two choices for the use of its community development block grant for FY 2016. Note: The maximum CDBG amount is $ 400,000 and requires a one to one match in city funds.
Proposal 1: Downtown intermodal transportation center which includes a parking lot, bus terminal, taxi terminal-Estimated Construction costs: $980,000.
Proposal 2: Pine street housing project which provides demolition of aging housing stock and replacement with new energy efficient homes for purchase by eligible low income residents-Estimated construction costs: $1 million for a total of 8 homes.
a. Using the cost stream formula (over 10 years, r = .05), what is the present value of each project’s construction costs?
b. Briefly discuss the potential benefit of each project
c. Briefly discuss the following for each project
d. Externalities
e. Intangibles/incommensurables
f. Which project would you choose and why?