Assume You Ran a Multiple Regression to Gain a Better

question 33

Multiple Choice

Assume you ran a multiple regression to gain a better understanding of the relationship between lumber sales, housing starts, and commercial construction. The regression uses lumber sales (in $100,000s) as the response variable with housing starts (in 1,000s) and commercial construction (in 1,000s) as the explanatory variables. The estimated model is Lumber Sales = β₀ + β₁Housing Starts + β₂Commercial Constructions + ε. The following ANOVA table summarizes a portion of the regression results. If Housing Starts were 17,000 and Commercial Construction was 3,200, the best estimate of Lumber Sales would be ________.

• A) $16,920,000
• B) $16,925,370
• C) $22,014,000
• D) $22,290,000

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Definitions:

Initial Investment

The amount of money used to start a project, purchase assets, or establish a business operation.

Net Present Value

The Net Present Value (NPV) is a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time, often used to assess the profitability of an investment.

Minimum Rate

The lowest acceptable rate of return on an investment, often used in the evaluation of projects or financial decisions.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.