SCENARIO 18-2 One of the Most Common Questions of Prospective House Buyers

question 136

Multiple Choice

SCENARIO 18-2
One of the most common questions of prospective house buyers pertains to the cost of heating in dollars (Y) . To provide its customers with information on that matter, a large real estate firm used the following 4 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit ( X₁ ) , the amount of insulation in inches ( X ₂ ) , the number of windows in the house ( X₃ ) , and the age of the furnace in years ( X ₄ ) . Given below are the EXCEL outputs of two regression models.


-Referring to Scenario 18-1,at the 0.01 level of significance,what conclusion should the builder draw regarding the inclusion of School in the regression model?

• A)School is significant in explaining house size and should be included in the model because its p-value is less than 0.01.
• B)School is significant in explaining house size and should be included in the model because its p-value is more than 0.01.
• C)School is not significant in explaining house size and should not be included in the model because its p-value is less than 0.01.
• D)School is not significant in explaining house size and should not be included in the model because its p-value is more than 0.01.

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Definitions:

Equivalent

A term expressing a state of equality or equivalency in value, function, or meaning.

Cash Held

Physical money held by a business in its cash registers or cash box, used for daily operations.

Present Value

The present-day valuation of coming monetary sums or cash flow sequences, upon applying a defined rate of return.

Compounded Annually

The process wherein the interest earned on an investment is added to the principal each year, and in the subsequent year, interest is earned on this new principal.