TABLE 14-6 One of the Most Common Questions of Prospective House Buyers

question 289

Multiple Choice

TABLE 14-6
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 (X₂) , the number of windows in the house (X₃) , and the age of the furnace in years (X₄) . Given below are the Excel outputs of two regression models.
Model 1

Model 2

-Referring to Table 14-6, what are the degrees of freedom of the partial F test for H₀: = β₃ = β₄ = 0 vs. H₁: At least one βⱼ ≠ 0, j = 3, 4?

• A) 2 numerator degrees of freedom and 15 denominator degrees of freedom
• B) 15 numerator degrees of freedom and 2 denominator degrees of freedom
• C) 2 numerator degrees of freedom and 17 denominator degrees of freedom
• D) 17 numerator degrees of freedom and 2 denominator degrees of freedom

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired.

Accumulated Depletion

The total amount deducted from the gross value of an asset to account for the extraction of natural resources over time.

Coal Mine

A physical location where coal is extracted from the earth.

Land Account

A record in the financial statements that represents the cost of land owned by an entity, not depreciated over time.