8.12 Fair market value of Hawaiian properties. Prior to 1980, private homeowners in Hawaii had to lease the land their homes were built on because the law (dating back to the islands' feudal period required that land be owned only by the big estates. After 1980, however, a new law instituted condemnation proceedings so that citizens could buy their own land. To comply with the 1980 law, one large Hawaiian estate wanted to use regression analysis to estimate the fair market value of its land. It's first proposal was the quadratic model E (V) = BO + BIX + BEE where ' = Leased fee value (i. e., sale price of property) r= Size of property in square feet HAWAIL LEASED FEE VALUE J. thousands SIZE PROPERTY of dollars x. thousands 70.7 135 52.7 9.6 57.6 17.6 412 79 451 152 713 120 1443 10 613 100 11 148. 12 85.0 10 2 13 171. 18.7 14 132 15 158 163 16 74.2 121 17 47.0 7.7 $47 9.9 19 11.2 75.2 124 Data collected for 20 property sales in a particular neighborhood, given in the table above, were used to fit the model. The least squares prediction equation is = -44. 0947 + 11.5339 x - 06378 x : (a) Calculate and for the model. (b) Do you detect any trends? If so, what does the pattern suggest about the model? (c) [ Hint. Divide the data into two subsamples, x g 12 and > >12, and fit the model to both subsamples. ] (d) Based on your results from parts b and c, 8.21 Fair market value of Hawaiian properties. Refer to Exercise 8. 12. (p. 407) and the data saved in the HAWAII file. Use one of the graphical techniques described in this section to check the normality assumption. 8. 36 Life insurance policies in force. The next table represents all life insurance policies (in millione) in force on the lives of U. S. residents for the years 1980 through 2006