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

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t-value= 0.24