TABLE 14-17
the Marketing Manager for a Nationally

question 183

Short Answer

TABLE 14-17
The marketing manager for a nationally franchised lawn service company would like to study the characteristics that differentiate home owners who do and do not have a lawn service. A random sample of 30 home owners located in a suburban area near a large city was selected; 15 did not have a lawn service (code 0) and 15 had a lawn service (code 1). Additional information available concerning these 30 home owners includes family income (Income, in thousands of dollars), lawn size (Lawn Size, in thousands of square feet), attitude toward outdoor recreational activities (Attitude 0 = unfavorable, 1
= favorable), number of teenagers in the household (Teenager), and age of the head of the household (Age).
The Minitab output is given below:
$\begin{array}{lccccccrr} & & & & \text { Odds } & \text { 95 \% CI } \\\text {Predictor }& \text {Coef }&\text { SE Coef }&\text { Z }& \text {P} &\text { Ratio} &\text { Lower} & \text {Upper }\\\text {Constant }& -70.49 & 47.22 & -1.49 & 0.135 & & & \\\text {Income }& 0.2868 & 0.1523 & 1.88 & 0.060 & 1.33 & 0.99 & 1.80 \\\text {Lawn Size} & 1.0647 & 0.7472 & 1.42 & 0.154 & 2.90 & 0.67 & 12.54 \\\text {Attitude} & -12.744 & 9.455 & -1.35 & 0.178 & 0.00 & 0.00 & 326.06 \\\text {Teenager} & -0.200 & 1.061 & -0.19 & 0.850 & 0.82 & 0.10 & 6.56 \\\text {Age} & 1.0792 & 0.8783 & 1.23 & 0.219 & 2.94 & 0.53 & 16.45\end{array}$

Log-Likelihood = -4.890
Test that all slopes are zero: G = 31.808, DF = 5, P-Value = 0.000

Goodness-of-Fit Tests
$\begin{array}{lrrr}\text { Method } & \text { Chi-Square } & \text { DF } & \text { P } \\ \text { Pearson } & 9.313 & 24 & 0.997 \\ \text { Deviance } & 9.780 & 24 & 0.995 \\ \text { Hosmer-Lemeshow } & 0.571 & 8 & 1.000\end{array}$

-Referring to Table 14-17, what is the estimated probability that a 48-year-old home owner with a family income of $100,000, a lawn size of 5,000 square feet, a negative attitude toward outdoor recreation, and one teenager in the household will purchase a lawn service?

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Definitions:

Initial Investments

The initial amount of money invested in a project, asset, or company to cover setup costs or purchase capital assets.

Working Capital

The difference between current assets and current liabilities, indicating the liquidity available to fund day-to-day operations.

Income Tax Rate

The percentage of income that is paid to the government as tax.

After-Tax Discount Rate

This is the discount rate that has been adjusted for taxes, used to evaluate the net present value of an investment after taking into account the tax implications.