Golden Years Easy Retirement Homes owns several adult care facilities throughout the southeast United States. A budget analyst for Golden Years has collected the data found in the accompanied table describing for each facility: the number of beds (X1), the annual number of medical in-patient days (X2), the total annual patient days (X3), and whether or not the facility is in a rural location (X4). The analyst would like to build a multiple regression model to estimate the annual nursing salaries (Y) that should be expected for each facility.

Number of beds in home	Annual medical in-patient days (100s)	Annual total patient days (100s)	Rural (1) and non-rural (0) homes	Annual nursing salaries ($100s)
137	128	385	0	5230
59	155	203	1	2459
120	281	392	0	6304
120	291	419	0	6590
120	238	363	0	5362
65	180	234	1	3622
120	306	372	1	4406
90	214	305	1	4173
96	155	169	0	1955
120	133	188	1	3224
62	148	192	0	2409
120	274	300	1	2066
116	154	321	0	5946
59	120	164	1	1925
80	261	284	1	4166
120	338	375	1	5257
80	77	133	1	1988
100	204	318	1	4156
60	97	213	1	1914
110	178	280	1	5173
120	232	336	0	4630
135	316	442	0	7489
59	163	191	1	2051
60	96	202	0	3803
25	74	83	1	2008
75	225	250	1	1288
64	91	214	1	4729
62	146	204	0	2367
108	255	366	1	5933
62	144	220	1	2782
90	151	286	0	4651
146	100	375	0	6857
62	174	189	1	2143
30	54	88	1	3025
79	213	278	0	2905
44	127	158	1	1498
120	208	423	0	6236
100	255	300	1	3547
49	110	177	1	2810
123	208	336	1	6059
82	114	136	1	1995
58	166	205	1	2245
110	228	323	1	4029
62	183	222	1	2784
86	62	200	1	3720
102	326	355	1	3866
135	157	471	0	7485
78	154	203	1	3672
83	224	390	1	3995
60	48	213	0	2820
54	119	144	1	2088
120	217	327	0	4432

1. Prepare three scatter plots showing the relationship between the nursing salaries and each of the independent variables, individually. What sort of relationship does each plot suggest?

2. If the budget analyst wanted to build a regression model using only i) one, ii) two, and iii) three independent variable(s) to predict the nursing salaries, what variable(s) should be used in each subcase?

3. What set of independent variables results in the highest value for the adjusted R2 statistic?

4. Suppose the personnel director chooses to use the regression function with all independent variables X1, X2, X3 and X4. What is the estimated regression function?

5. In your spreadsheet, calculate an estimated annual nursing salary for each facility using the regression function identified in part 4. Based on this analysis which facilities, if any, should the budget analyst be concerned about? Explain your answer.