isds 361A

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ISDS 361A, Mon/Wed 10am

Case Study

In this case, the cost of Toyota Camry depends on many factors which are year, mileage and condition. 19 sales prices of Camry are given in order to figure out the relationship between the sales price and mileage. We need to use regression data analysis based on the sample of 19 sales of Camry to test if there is a liner relation between mileage and sales price. Based on the data, a straight line is able to fit through the points. We need to find out if the more mileage means the less sales prices which is Negative Liner Relationship.

Hypothesis test: HO: B1=0

HA: B10

X = the mileage (independent), and Y = the price (dependent). Thus, the interpretation of the regression equation: Y= 16.50 – 0.06X

Since the Toyota Camry is 60,000 miles, x=60,000. Y= 16.50-0.06(60000)= -3583.5

Based on the confidence level of 95%, = 0.05. If P-value < , we reject HO.

P-Value = 0.00034751 < 0.05. We reject HO.

Therefore, there is a significant relationship between price and mileage/there is a sufficient evidence to reject HO in favor of B1.

The coefficient of determination(R-Square): approximately 0.54 = 54%. The definition of coefficient of determination is 54% of the sales prices of Camry explained by the mileage variable. We use Correlation Coefficient: =CORREL(Miles Cells, Prices Cells)= -0.733932829, the Square of Correlation Coefficient = 0.538657397 which is the R Square.

Prediction interval: with 95% confidence, the 2007 Camry that has been driven 60,000 miles should be between $9,600 and $16,290

Confidence interval: with 95% confidence, the 2007 Camry that has been driven 60,000 miles should be between $12,170 and $13,710

Conclusion: we can say that the sales price linearly with the mileage. if purchasing a 2007 Camry with 60,000 miles, I would offer to the seller the price between $9,600 to $16,290.