Question: An investigation of house prices in two luxury developments was undertaken. Data was collected for 20 randomly selected homes for the price ($000), house size (sq.ft.) and the location (=0 for Garden Grove and =1 for River Bend).

1. Use EXCEL to run a multiple regression to estimate house price using all independent variables provided. ATTACH A COPY OF THESE OUTPUTS.
2. State the estimated equation. Interpret the equation results for the slope coefficient for size.
3. Explain the effect of the dummy variable on the model with particular reference to the intercept. Be specific.
4. Test for significance of each slope coefficient. Use the p-value approach and α = 0.01. (Incorporate all tests into ONE five step answer as in the slides.)
5. What would you estimate the price of a home in Garden Grove to be if it had exactly 3000 square feet?
6. What would you estimate the price of a home in River Bend to be if it had exactly 3000 square feet?
7. Can this equation estimate the price for a home in Garden Grove that has 3900 square feet? Explain.

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Solution: The downloadable solution consists of 4 pages
Deliverable: Word Document