Regression Model: Market Value = β0 + β1*HouseAge + ɛ
Step 1: Correlation Analysis
Correlations
Market Value House Age
Pearson Correlation Market Value 1.000 .361
House Age .361 1.000
Sig. (1-tailed) Market Value . .009
House Age .009 .
N Market Value 42 42
House Age 42 42
Step 2: R2
Model Summary
Model Adjusted R Std. Error of the
R R Square Square Estimate
d1 .361a .131 .109 $9,961.98403
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a. Predictors: (Constant), House Age
R2 = .131, Adjusted R2 = .109
→ Fit: The regression line has a weak fit with the data
→ Variation explained: 10.9% variation of the Market Value are explained by
HouseAge
Step 3: Model Assessment
ANOVAb
Model Sum of Squares df Mean Square F Sig.
1 Regression 5.964E8 1 5.964E8 6.010 .019a
Residual 3.970E9 40 9.924E7
Total 4.566E9 41
a. Predictors: (Constant), House Age
b. Dependent Variable: Market Value
ANOVA is used to test for significance of the regression
H0: population slope coefficient = 0 => Don’t have the regression line
H1: population slope coefficient ≠ 0 => Have regression line
F = 6.010, p = .019 < 0.05
→ Reject H0, Accept H1
→ There should be a regression line
Step 4: Assessment of coefficent
Coefficientsa
Model Standardized
Unstandardized Coefficients Coefficients
B Std. Error Beta t Sig.
1 (Constant) 45217.761 19172.989 2.358 .023
House Age 1570.434 640.601 .361 2.452 .019
a. Dependent Variable: Market Value
(Constant): t = 2.358, p = 0.023 < 0.05 => It is significant
(HouseAge): t HA = 2.452, p =0 .019 < 0.05=> It is significant
Step 5: Write the model
Unstandardized Regression Model: => Forecasting
Market Value = β0 + β1*HouseAge + ɛ
Market Value = 45217.761 + 1570.434*HouseAge+ ɛ
Based on the given data, forecasting the Market Value of 1 house that have the HouseAge = 2
Market Value = $45217.761 + 1570.434*2= $48358,629
Standardized Regression Model => Relationship proven
Market Value = 0.361*HouseAge(Unit in z-score)
If the HouseAge increase 1 standard deviation, the Market Value will increase 0.361
standard deviation (of Market Value)