You are a new hire at Laurel Woods Real Estate which special

You are a new hire at Laurel Woods Real Estate which specialixes in spelling forceclosed homes via public auction. Your boss has asked you to use the following data (mortgage balance, monthly payments, payments made before default, and final auction price) on a random sample of recent sales in order to estimate what the actual auction price willl be. add a new variable that describes the potential interaction between the loan amount and the number of payments made. Determine the regression ewuation. Compute the t-value corresponding to the interaction term.

Solution

The regression equation is
auction price = - 5153 + 0.366 loan + 13.4 monthly payment + 340 payment mode

Predictor Coef SE Coef T P
Constant -5153 24096 -0.21 0.833
loan 0.3660 0.1270 2.88 0.011
monthly payment 13.37 29.14 0.46 0.652
payment mode 340.3 221.9 1.53 0.145