Shown below are rental and leasing revenue figures for offic

Shown below are rental and leasing revenue figures for office machinery and equipment in the United States over a 7-year period according to the U.S. Census Bureau. Use these data and the regression tool in the data analysis tool pack to run a linear regression. Based on the formula you get from the regression output, answer the following questions:

a) What is the forecast for the rental and leasing revenue for the year 2011?

b) How confident are you in this forecast? Explain your answer by citing the relevant metrics.

Year Rental and Leasing ($ millions)

2004 5,860

2005 6,632

2006 7,125

2007 6,000

2008 4,380

2009 3,326

2010 2,642

Solution

a. Using regression equation:

Rental and Leasing = 1,367,819 - 678.964*Year

For year = 2011,

Rental and leasing = 1,367,819 - 678.964*2011 = 2,422.396

b. F stat for regression model: 13.95537

P - Value = 0.013491

As P-Value is less than 0.05, the regression model is significant.

P-Values for both parameters is less than 0.05, so both parameters are significant.

Hence, the model is reliable for estimation.