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1.

A developer who specializes in Resort & Hotel properties is considering

purchasing a large tract of land adjoining a lake. The current owner of the tract
has already subdivided the land into separate building lots and has prepared the
lots by removing some of the trees. The developer wants to forecast the value of
each lot. From previous experience, she knows that the most important factors
affecting the price of the lot are size, number of mature trees, and distance to the
lake. From a nearby area, she gathers the relevant data for 60 recently sold lots.
These data are shown in the table 1 below. (Column 1 = price in thousands of
dollars; column 2 = lot size in thousands of square feet; column 3 = number of
mature trees; column 4 = distance to the lake in feet.) A multiple regression
analysis was performed.
Table 1
Price
105.4
91.2
183.3
93.8
207.5
130.9
162.3
18.8
80.5
38.3
71.3
55.5
85.7
110.5
85.1
78.3
27.2
70.9
101.4
133.3
117.7
49.7
49.6
83.2
81.3
152.5
112.2
37.1
130.2
39.1
81.9
24.6
101.9
117.6
148.8
60.2

Lot size
41.2
44.8
21.3
43.9
57.7
33.4
31.4
27.4
26.2
40
47.6
31.6
21.6
36.3
47.2
30.5
41.8
20.6
35.3
40.1
35.6
20.6
22.4
45.8
29.4
51.7
27.2
37
38.9
32.5
34
35.8
32.9
46.4
51.9
28.9

Trees
24
5
72
58
52
78
65
22
68
57
53
36
23
48
61
41
1
20
38
68
24
16
32
77
40
60
0
50
48
25
12
16
44
62
59
0

Distance
42
71
43
14
12
26
51
0
83
76
35
26
24
98
59
55
60
33
75
0
41
77
86
19
0
34
16
49
63
45
0
34
42
48
39
66

43.7
113.1
38.1
89.2
3
55.8
89.7
136.1
44.7
63.2
163.4
64.1
98.7
139.9
92
66.6
16.4
131.9
11
27.9
103.5
107
51.6
133.4

35.2
30.4
38.3
49.2
21.5
41.9
21.8
66.3
28.2
41.9
46.7
32.1
38.5
27.6
47
20.7
34
31.9
28
40
46.6
23.2
46.4
32.1

57
70
24
61
46
10
79
56
73
64
69
12
59
0
65
24
12
76
2
52
26
11
53
55

77
78
62
0
83
69
62
34
77
65
27
0
77
0
37
51
75
63
42
84
70
83
44
98

a) What is the standard error of estimate? Interpret its value.

b) What is the coefficient of determination? What does this statistic tell you?
c) What is the coefficient of determination, adjusted for degrees of freedom? Why does
this value differ from the coefficient of determination? What does this tell you about the
model?
d) Test the overall validity of the model. What does the p-value of the test statistic tell
you?
e) Interpret each of the coefficients.
f) Test to determine whether each of the independent variables is linearly related to the
price of the lot.

2. The admissions officer of a university is trying to develop a formal system of deciding

which students to admit to the university. She believes that determinants of success
include the standard variables-high school grades and SAT scores. However, she also
believes that students who have participated in extracurricular activities are more likely
to succeed than those who have not. To investigate the issue, she randomly sampled
100 fourth-year students and recorded the following variables.
1. GPA for the first 3 years at the university (range: 0 to 12)
2. GPA from high school (range: 0 to 12) SAT score (range: 200 to 800)
3. Number of hours on average spent per week in organized extracurricular activities in
the last year of high school
The data are shown in the table 2 below.
a) Develop a model that helps the admissions officer decide which students to admit,
and use the computer to generate the usual statistics.
b) What is the standard error of estimate? What does this statistic tell you?
c) What is the coefficient of determination? Interpret its value.
d) What is the coefficient of determination, adjusted for degrees of freedom? Interpret its
value.
e) Test the overall validity of the model. What does the p-value of the test statistic tell
you?
f) Interpret each of the coefficients.
g) Test to determine whether each of the independent variables is linearly related to the
dependent variable.
h) Predict with 95% confidence the GPA for the first 3 years of university for a student
whose high school GPA is 10, whose SAT score is 600, and who worked an average of
2 hours per week on organized extracurricular activities in the last year of high school.
i) Estimate with 90% confidence the mean GPA for the first 3 years of university for all
students whose high school GPA is 8, whose SAT score is 550, and who worked an
average of IO hours per week on organized extracurricular activities in the last year of
high school.

Table 2
Univ GPA
9.2
4.2
8.9
4.5
6.5
7.3
6.3
8.1
5.1
6.4
3.2
11.1
11
9.4
5.6
7.3
6
10.5
11
5
10.7
7
6
2.4
11.2
3.5
7.8
6.7
11.4
9
8.4
6.9
6.5
7.7
6.6
6.8
6.7
6.1
9.1
2.9
9.4
10
10.2
3.9
8.5
3
2.6
11.5
5.8
10.2

HS GPA
7.1
4
7.1
6.3
4.3
10.6
7.5
11
9.4
11.7
4.9
11.6
10.2
9
8.8
6.5
10.5
9.5
9.6
8.2
8
10.4
7.8
6.5
10
2.8
6.7
7.8
8
6.7
9.4
8.6
6.4
10.9
10.6
4.6
4.5
4.9
10.5
6.4
11.5
10
11
7.3
10.2
7.2
4.9
11
10.2
9.6

SAT
554
601
637
466
529
466
626
583
421
479
644
481
406
554
625
576
386
464
569
499
630
479
536
446
563
570
412
612
600
692
468
541
518
546
676
544
554
540
603
528
589
577
559
446
543
615
549
481
652
554

Activities
4
0
0
0
0
3
6
8
1
9
7
8
9
9
0
5
6
1
1
8
7
9
10
10
9
0
1
9
9
9
7
10
0
2
1
2
3
7
2
7
1
10
6
8
6
0
1
8
1
9

7.7
9.1
10
4.4
4.7
8.1
7.7
9.1
6.7
3
6.3
11.6
6.4
8.9
9.2
7.4
3.4
6.7
5.9
7.3
10.3
6.9
7.2
6
8.6
6.9
7.4
10.3
6.9
7.1
6.5
7
4.9
10.5
8.7
9.7
9
5.6
2.3
3.4
3.1
7.7
6.8
10.7
8.2
7.3
6.7
6
8.2
9.8

8
6.3
7.4
10.1
6.6
6.5
5.2
11.2
9
6.7
6.7
11.8
8.1
7.7
6
9.2
7.1
6.8
4.5
5.9
10.4
8.4
7.5
5.9
8.1
4.1
8.2
9.6
6.8
7.4
8.3
8.7
5
8
9.3
10
6.9
9
4.4
5.7
7.3
8.5
8.2
8.9
7.9
7.7
9
7.4
9.7
8.8

537
653
653
442
509
594
629
566
648
439
672
519
443
407
580
566
560
580
497
532
505
565
592
510
469
378
439
586
416
523
540
608
516
531
474
559
521
520
668
479
646
558
554
401
578
534
489
592
589
587

6
5
5
6
2
3
6
0
0
6
1
10
6
10
4
5
3
0
5
7
1
0
0
5
9
8
6
3
5
6
3
7
5
1
3
5
2
7
9
5
4
5
5
1
8
7
2
8
3
6