Exhibit 16-4 In a Laboratory Experiment, Data Were Gathered on the Life

question 31

Multiple Choice

Exhibit 16-4
In a laboratory experiment, data were gathered on the life span (Y in months) of 33 rats, units of daily protein intake (X₁) , and whether or not agent X₂ (a proposed life extending agent) was added to the rats diet (X₂ = 0 if agent X₂ was not added, and X₂ = 1 if agent was added.) From the results of the experiment, the following regression model was developed. Also provided are SSR = 60 and SST = 180.
-Refer to Exhibit 16-4. The test statistic for testing the significance of the model is

• A)0.50
• B)5.00
• C)0.25
• D)0.33

---

Definitions:

Payback Period

The duration needed to recoup the cost of an investment.

Straight-Line Depreciation

Straight-line depreciation is an accounting method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Discount Factor(s)

A numerical factor used to calculate the present value of future cash flows, reflecting how future values are worth less in today's terms.