Question: Designing Web Sites

You plan to seek some venture capital and to start your own company. In order to prepare a capital budget as part of your business plan, you have consulted the largest website design firm in North America regarding the cost of designing and launching sites of various levels of complexity. On the Web worksheet of the accompanying spreadsheet are data pertaining to 25 websites randomly selected from the firms’ client base: the number of different pages on the site ( x ) and the fees charged by the firm for the design and launch (y).

Important instructions: Use Excel for calculating the x and y variable means and standard deviations, and the correlation. Otherwise, answer by hand and show your work. Retain all precision throughout by doing your calculations in an Excel spreadsheet with cell references instead of retyping numbers. Find p-values and critical values using TDIST and TINV in Excel.

1. Prepare a scatter plot of the data. Comment on each of the four assumptions required to use the regression model and whether they are reasonable in this case. Use one bullet point for each.
2. Estimate of the true regression equation for predicting y from x . Draw the regression line on the scatterplot.
3. Test whether x has statistically significant predictive power. Assume α = 0.05.
4. Give a 95% confidence interval for the marginal cost of an additional page on a new site.
5. You anticipate that your website will have 20 pages at its launch. Construct a 95% confidence interval for the mean cost of 20-page sites.
6. You intend to be conservative in preparing all of your budget estimates. Accordingly, you plan to budget an amount for your website that is the upper bound of a 90% prediction interval for the cost of a 20-page website. State the prediction interval and the upper bound.

Price: $2.99

Solution: The downloadable solution consists of 6 pages
Deliverable: Word Document