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Simple Regression Analysis

2a. Perform a simple regression analysis to forecast the number of apartment units leased, based only on average lease price. What is your forecast if the lease price is to be $455?

Semester Average lease price
x Number of Units leased
y X^2 xy Y^2
1 450 291 202500 130950 84681
2 460 228 211600 104880 51984
3 450 252 202500 113400 63504
4 470 265 220900 124550 70225
5 440 270 193600 118800 72900
6 430 240 184900 103200 57600
7 460 288 211600 132480 82944
8 440 246 193600 108240 60516
TOTAL 3600 2080 1621200 936500 544354

Values are a= 72.50, b= 0.42
Y9= 262.08

2b. What percentage of variation in number of units leased is explained by average lease price?

2c. Evaluate the goodness of this forecasting model.

3a. Perform a multiple regression analysis to forecast the number of apartment units leased, based on university enrollment and average lease price. What is your forecast if university enrollment is expected to be 6,500 students and the average lease price is to be $465?

3b. What percentage of variation in number of units leased is explained by this model?

3c. Evaluate the goodness of this forecasting model.

4. Which forecasting model above would you recommend? Why?

5. Based on your multiple regression model and forecast from part 3, what would be the net financial impact if the apartment lease price were increased by $6? What is your recommendation on setting apartment lease prices?

Solution Preview

2a. Perform a simple regression analysis to forecast the number of apartment units leased, based only on average lease price. What is your forecast if the lease price is to be $455?

Semester Average lease price
x Number of Units leased
y X^2 xy Y^2
1 450 291 202500 130950 84681
2 460 228 211600 104880 51984
3 450 252 202500 113400 63504
4 470 265 220900 124550 70225
5 440 270 193600 118800 72900
6 430 240 184900 103200 57600
7 460 288 211600 132480 82944
8 440 246 193600 108240 60516
TOTAL 3600 2080 1621200 936500 544354

Values are a= 72.50, b= 0.42
Y9= 262.08

These values are correct (see the regression output in the Excel file)

2b. What percentage of variation in number of units leased is explained by average lease price?

As shown in the output from the Excel regression, the R Square of this model is 0.05 (5%). This implies that only 5% of the variation in the number of units leased is explained by the average lease price.

2c. Evaluate the goodness of ...

Solution Summary

Solution discusses Simple Regression Analysis

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