Question

{Exercise 12.53 (Algorithmic)} Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars). Weekly Usage (hours) Annual Maintenance Expense 20 19 17 24 27 32 35 39 39 49 24 33 31 35 38 41 47 54 45 42 a.Develop the estimated regression equation that relates annual maintenance expense (in hundreds of dollars) to weekly usage hours (to 3 decimals). Expense = + Weekly Usage b.Test the significance of the relationship in part (a) at a .05 level of significance. Compute the value of the F test statistic (to 2 decimals). The p value is - Select your answer -less than .01between .01 and .025between .025 and .05between .05 and .10greater than .10 What is your conclusion? - Select your answer -Conclude that there is a significant relationship between expense and weekly usageDo not conclude that there is a significant relationship between expense and weekly usage c.Jensen expects the new machine to be used 30 hours per week. What is the expected annual maintenance expense in hundreds of dollars (to 2 decimals)? Develop a 95% prediction interval for the company's annual maintenance expense for this machine (to 2 decimals). ( , ) d.If the maintenance contract costs $3000 per year, would you recommend purchasing the contract for the new machine in part (c)? - Select your answer -Yes, the expected maintenance expense is greater than $3000No, the expected maintenance expense is less than $3000

Answer 1