Question 4 Beachcomber Ltd in a local car dealership that sells used and new vehicles. The manager of the company wants to know how different variables affect the sales of his vehicles. A random...

Question 4

Beachcomber Ltd in a local car dealership that sells used and new vehicles. The manager of the company wants to know how different variables affect the sales of his vehicles. A random sample of
yearly data was taken with the view to testing the model:
SALES=?+?AGE+?MIL+?ENG
Where SALES= amount that a vehicle is sold for($000’s), AGE = age of the vehicle, MIL= the total
mileage of the vehicle at the point of sale and ENG = the size of the engine. The sample of data was processed using MINITAB and the following is an extract of the output obtained:

The regression equation is *****

                           Coef            StDev           t-ratio           p-value

Predict

or

constant              1.7586          0.2525          6.9648             0.0000

AGE                     0.2124          0.3175           *                     0.5042

MIL                      -0.7527          0.3586        -2.0991              **

ENG                      4.8124           ***              7.7664             0.0000

Analysis of Variance

Source                 DF                 SS                MS         F               P

Regressi                3             413.1291        138.709    ****          0.00

on                                                                    7

Error                     50           457.7607         2.2888

Total                     53

a) Hence test whether δ is significant. Give reasons for your answer.
b) Perform the F Test making sure to state the null and alternative hypothesis.
c) Given an interpretation of the term “R-sq” and comment on its value.