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
$	85,615		$	1,026.96		1		$	19,475
	113,393			990.66		34			33,975
	111,466			751.28		9			45,675
	100,925			855.98		8			16,600
	97,600			860.23		16			40,700
	104,400			983.27		19			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

A.

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 +

Payments 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
Payments Made
(Loan)(Payments 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.)

T-Value=

Answer 1

A)Applying multiple regression from excel: data-data analysis: regression

Auction price

=-129406.631+1.496*loan+21.147*monthly payment+1559.184*payment made+(-0.013)*x1x3

	Coefficients	Standard Error	t Stat	P-value
Intercept	-129406.631	66969.663	-1.932	0.072
loan	1.496	0.566	2.643	0.018
monthly payment	21.147	29.323	0.721	0.482
Payments Made	1559.184	1988.459	0.784	0.445
x1x3	-0.013	0.019	-0.697	0.496

t-value corresponding to the interaction term =-0.70