Question
Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine.
Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars).
Weekly Usage
(hours)Annual
Maintenance
Expense1317.01022.02030.02837.03247.01730.52432.53139.04051.53840.0(a)
Develop the estimated regression equation that could be used to predict the annual maintenance expense (in hundreds of dollars) given the weekly usage (in hours). (Round your numerical values to two decimal places.)
=0.95x+10.53
(b)
Test the significance of the relationship in part (a) at a 0.05 level of significance. (Use theFtest.)
State the null and alternative hypotheses.
H0:10
Ha:1= 0
H0:10
Ha:1< 0
H0:0= 0
Ha:00
H0:1= 0
Ha:10
H0:00
Ha:0= 0
Find the value of the test statistic. (Round your answer to two decimal places.)
Find thep-value. (Round your answer to three decimal places.)
p-value =
State your conclusion.
Do not rejectH0. We cannot conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.
RejectH0. We conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.
RejectH0. We cannot conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.
Do not rejectH0. We conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.
(c)
Jensen expects to use the new machine33hours per week. Develop a 95% prediction interval for the company's annual maintenance expense (in hundreds of dollars). (Round your answers to two decimal places.)
$hundred to $hundred
(d)
If the maintenance contract costs $3,300per year, would you recommend purchasing it? Why or why not? (Round your answer to two decimal places.)
The expected expense of a machine being used33hours per week is $hundred. Since this expected expense is
---Select---
greater
less
than the cost of the maintenance contract, the maintenance contract
---Select---
is not
is
advisable.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started