The appraisal of a warehouse can appear straightforward compared to other apprai

Question

The appraisal of a warehouse can appear straightforward compared to other appraisal assignments. A warehouse appraisal involves comparing a building that is primarily an open shell to other such buildings. However, there are still a number of warehouse attributes that are plausibly related to appraised value. The following is JMP output of a simple linear regression model of sale price per square foot (y) on truss height (x)

60 Analysis of Variance Sum of Source DF Squares M Model Error C. Toal 18 92443641 Parameter Estimates Term Estimate Std Error Intercept 23.772147 1.113475 Height 09871509 0.046842 50- 1 89035506 17 34.08135 45 40- 35 10 15 20 25 Height 30 35

Explanation / Answer

a)  equation of the least squares simple linear regression line: y =23.772147+0.9871509X

b)as truss height 50 is beyond limit of our range of values which is used to construct above regression equation. Therefore it would be unreasonable to use the above equation to predict the price.

c)coefficient of determination =(SSR/SST)=890.35506/924.43641=0.963133

d) here slope b1=0.9871509

and std error of slope SEb1=0.046842

therefore test stat t=b1/std error =0.9871509/0.046842=21.0741

for above test stat at 17 degree of freedom ; p value =0.0000

as p value is signfiicantly low then 0.1 level we reject null hypothesis.

there is sufficient evidence to claim that  there is a significant linear relationship between sale price per square foot and truss height

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