Question

You are a new hire at Laurel Woods Real Estate, which specializes in selling foreclosed homes via public auction. Your boss has asked you to use the following data (mortgage balance, monthly payments, payments made before default, and final auction price) on a random sample of recent sales in order to estimate what the actual auction price will be. Add a new variable that describes the potential interaction between the loan amount and the number of payments made.

Loan | Monthly Payments | Payments Made | Auction Price | |||||||

$ | 85,609 | $ | 1,033.34 | 1 | $ | 18,975 | ||||

110,201 | 964.46 | 32 | 39,275 | |||||||

110,098 | 745.28 | 9 | 44,225 | |||||||

86,240 | 1,021.75 | 8 | 16,600 | |||||||

97,600 | 872.10 | 16 | 40,700 | |||||||

104,400 | 983.27 | 15 | 63,100 | |||||||

113,800 | 1,075.54 | 21 | 72,600 | |||||||

116,400 | 1,087.16 | 35 | 72,300 | |||||||

100,000 | 900.01 | 33 | 58,100 | |||||||

92,800 | 683.11 | 36 | 37,100 | |||||||

105,200 | 915.24 | 34 | 52,600 | |||||||

105,900 | 905.67 | 38 | 51,900 | |||||||

94,700 | 810.70 | 25 | 43,200 | |||||||

105,600 | 891.33 | 20 | 52,600 | |||||||

104,100 | 864.38 | 7 | 42,700 | |||||||

85,700 | 1,074.73 | 30 | 22,200 | |||||||

113,600 | 871.61 | 24 | 77,000 | |||||||

119,400 | 1,021.23 | 58 | 69,000 | |||||||

90,600 | 836.46 | 3 | 35,600 | |||||||

104,500 | 1,056.37 | 22 | 63,000 |

Loan sum= 2046448 |
Payment sum= 18613.74 |
Payments made =476 |
Auction =972775 |

Determine the regression equation. **(Round your answers
to 3 decimal places. Negative amounts should be indicated by a
minus sign.)**

**Auction price=**_______ + _______ loan +
_________ Monthly payment + ____________ Payment made
+_________x1x3

Complete the following table. **(Round your answers to 3
decimal places. Leave no cells blank - be certain to enter "0"
wherever required. Negative amounts should be indicated by a minus
sign.)**

Predictor | Coefficient | SE Coefficient | T. | P-Value. |

Constant | ||||

Loan | ||||

Monthly Payment | ||||

Payment made | ||||

(loan)(Payment made) |

Compute the *t*-value corresponding to the interaction
term. **(Round your answer to 2 decimal places. Negative
amount should be indicated by a minus sign.)**

Answer #1

Auction Price =-45,717.23 + 0.67*Loan +18.04*Monthly Payment -314.46*Payments Made+0.01*X1X3

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Regression output | confidence interval | |||||

variables | coefficients | std. error | t (df=15) | p-value | 95% lower | 95% upper |

Intercept | -45,717.2308 | 84,113.4083 | -0.544 | .5948 | -225,000.7160 | 133,566.2543 |

Loan | 0.6708 | 0.6781 | 0.989 | .3382 | -0.7745 | 2.1160 |

Monthly Payments | 18.0404 | 36.8665 | 0.489 | .6317 | -60.5387 | 96.6195 |

Payments Made | -314.4649 | 2,554.6508 | -0.123 | .9037 | -5,759.5742 | 5,130.6443 |

X1X3 | 0.0058 | 0.0241 | 0.243 | .8117 | -0.0454 | 0.0571 |

-----------------------------------------------------------------------------------------------------------

t-value= 0.24

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