The owner of Maumee Ford-Volvo wants to study the relationship between the age o

Question

The owner of Maumee Ford-Volvo wants to study the relationship between the age of a car and its selling price. Listed below is a random sample of 12 used cars sold at the dealership during the last year.

Determine the regression equation. (Negative amounts should be indicated by a minus sign. Round your answers to 3 decimal places.)

A=

B=

Estimate the selling price of an 9-year-old car (in $000). (Round your answer to 3 decimal places.)

Interpret the regression equation (in dollars). (Round your answer to the nearest dollar amount.)

For each additional year, the car decreases___in value

Car Age (years) Selling Price ($000) 1 10 10.8 2 6 9.1 3 12 4.3 4 16 5.0 5 8 5.1 6 7 11.5 7 9 11.6 8 13 8.0 9 12 8.0 10 16 3.9 11 4 12.8 12 4 11.1

Explanation / Answer

Answer

First, we need to enter this data into Excel sheet

let Age be the known x values and Selling price be the known y values

then using the SLOPE and INTERCEPT function in excel to calculate the value of slope and intercept

we get

Slope(m) = -0.572 and Intercept(c) = 14.009

so, we got the regression equation as

Selling price = 14.009 - 0.572*Age

so, A(slope) = -0.572 and B(intercept) = 14.009

Estimation of selling price for an 9-year-old car

putting age = 9 in the regression equation, we get

Selling price = 14.009 - 0.572*9 = 14.009 - 5.148 = 8.861 (in $000)

For an 9-year-old car, the estimated selling price is 8.861 (in $000)

Since the slope is -0.572, so for each additional year, the car decreases 0.572 (in $000) in value

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