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Posted on Jul 18, 2024

When trying to decide what car to buy, real value is not necessarily determined by how much you spend on the initial purchase. Instead, cars

When trying to decide what car to buy, real value is not necessarily determined by how much you spend on the initial purchase. Instead, cars that are reliable and dont cost much to own often represent the best values. But no matter how reliable or inexpensive a car may cost to own, it must also perform well.

To measure value, Consumer Reports developed a statistic referred to as a value score. The value score is based upon five-year owner costs, overall road-test scores, and predicted-reliability ratings. Five-year owner costs are based upon the expenses incurred in the first five years of ownership, including depreciation, fuel, maintenance and repairs, and so on. Using a national average of 12,000 miles per year, an average cost per mile driven is used as the measure of five-year owner costs. Road-test scores are the results of more than 50 tests and evaluations and are based on a 100-point scale, with higher scores indicating better performance, comfort, convenience, and fuel economy. The highest road-test score obtained in the tests conducted by Consumer Reports was a 99 for a Lexus LS 460L. Predicted-reliability ratings (1 = Poor, 2 = Fair, 3 = Good, 4 = Very Good, and 5 = Excellent) are based upon data from Consumer Reports Annual Auto Survey.

A car with a value score of 1.0 is considered to be an average-value car. A car with a value score of 2.0 is considered to be twice as good a value as a car with a value score of 1.0; a car with a value score of 0.5 is considered half as good as average; and so on. The data for three

sizes of cars (13 small sedans, 20 family sedans, and 21 upscale sedans), including the price ($) of each car tested, are contained in the file named CarValues. You may use dummy variables to incorporate the effect of size of car[categorical variable with three values]. Your report should include:

a. an estimated regression with Family-Sedan and Upscale-Sedan as the independent variables, and treating Cost/Mile as the dependent variable. Discuss your findings.

b. Estimated regression equation using Cost/Mile, Road-Test Score, Predicted Reliability, Family-Sedan, and Upscale-Sedan as the independent variables, and treating Value Score as the dependent variable.

c. Delete any independent variables that are not significant from the estimated regression equation developed using = 0.05 level of significance. After deleting any independent variables that are not significant, develop a new estimated regression equation.

d. Suppose someone claims that smaller cars provide better values than larger cars. For the data in this case, the Small Sedans represent the smallest type of car and the Upscale Sedans represent the largest type of car. Does your analysis support this claim?

e. Develop an estimated regression equation that could be used to predict the value score given the value of the Road-Test Score and the Predicted Reliability. What conclusions can you derive from your analysis?

Predicted Reliability 20 74 71 70 80 74 21 68 1.25 1 sire 2 Toyota Corolla (base, manual) Small Sedan 3 Mardai Touring (manual) Small Sedan 4 Toyota Corolla Small sedan 5 Marda3i Touring Small Sedan 6 Hyundai Elantra GLS Small Sedan 7 Nissan Sentra 2.0 SL Small Sedan 8 Kia Forte Sedan EX Small Sedan 9 Ford Focus SE Small Sedan 10 Ford Fiesta SE Small Sedan 11 Volkswagen letta SE (2.5) Small Sedan 12 Volkswagen Jetta TDI Small Sedan 13. Chevrolet Cruze LS (1.8) Small Sedan 14 Chevrolet Cruze ILT (1.4) Small Sedan 15 Nissan Altima 255(4-cyl.) Family Sedan 15 Kia Optima LX 2,4 Family Sedan 17 Subaru Legacy 2.51 Premium Family Sedan 18 Ford Fusion Hybrid Family Sedan 19 Honda Accord LX.P (4 cyl) Family Sedan 20 Marda6 i Sport (4-cyl.) Family Sedan 21 Hyundai Sonata GLS (2.4) Family Sedan 22 Ford Fusion SE (4-cyl.) Family Sedan 23 Chevrolet Malibu LT (4 cyl.) Family Sedan 24 Kia Optima SX 2017 Family Sedan 25 Ford Fusion SEL (VG) Family Sedan 26 Nissan Altima 3.5 SR (6) Family Sedan 27 Hyundai Sonata Limited (2.0T) Family Sedan Sheet2 Sheet4 Sheets 0.52 Price (5) Cost/Mile Road Test Score 16,419 0.44 18,895 0.5 18,404 0.42 19,745 0.52 18.445 0.53 20,150 0.57 19,040 0.57 20,280 0.52 16,595 0.47 20,300 0.54 25,100 0.5 18,375 20,530 23,970 21,885 23,830 0.59 32,360 0.63 23,730 0.56 22,035 0.58 21,800 0.56 23,625 0.57 24, 115 0.52 29,050 0.72 28,400 0.67 30,335 0.69 28,090 0.66 61 60 68 67 69 91 0.6 0.59 Value Score 4 1.99 5 1.04 4 1.89 5 1.82 3 1.64 4 1.51 3 1.32 2 13 2 3 1.24 2 1.18 1 0.96 1 0.91 4 1.75 4 1.73 4 1.73 5 17 4 1.62 4 1.6 3 1.58 4 155 3 1.48 4 1.43 4 1.42 4 1.42 3 1.39 0.58 81 83 84 80 23 89 76 74 84 80 93 89 a 3 89 90 81 75 88 83 52 4 4 1.39 1.36 1.14 132 1.29 1.2 1.2 LOS 3 3 5 3 1.45 5 5 63 91 82 84 86 83 84 5 0.66 0.67 0.74 0.71 0.71 0.62 0.7 0.67 0.77 0.75 0.75 0.73 0.75 0.62 0.79 0.73 0.78 0.76 0.78 0.65 4 4 27 Hyundai Sonata Limited (2.0T) 28 Honda Accord EX-L (6) 29 Mazda6 s Grand Touring (V6) 30 Ford Fusion SEL (V6, AWD) 31 Subaru Legacy 3.6R Limited 32 Chevrolet Malibu LTZ (V6) 83 Chrysler 200 Limited (V6) 34 Chevrolet Impala LT (3.6) 35 Lexus ES 350 36 Acura TL (base) 37 Lexus IS 250 38 Infiniti G25 Journey 39 Lexus 5 250h Premium 40 Acura TSX (4-cyl.) 41 Infiniti G37 Journey 42 Toyota Avalon Limited 43 Hyundai Genesis 3.8 44 Volvo S60 T5 45 Nissan Maxima 3.5 SV 46 Buick Regal CXL (2.4) 47 Lincoln MKZ 48 BMW 328i 49 Audi A4 Premium Quattro 50 Ford Taurus Limited 51 Buick Regal CXL (turbo) 52 Mercedes-Benz 300 Sport 53 Volkswagen CC Luxury (2.0T) 54 Saab 9-3 2.0T 55 Buick Lacrosse CXS (16) 56 Shell Sheet2 Family Sedan Family Sedan Family Sedan Family Sedan Family Sedan Family Sedan Family Sedan Family Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan 28,090 28,695 30,790 30,055 30,044 28,015 27,825 28,995 38,615 36,465 33,734 34,225 38,939 29,675 37,225 35,485 39,850 35,100 33,700 28,840 37,160 39,175 35,895 34,980 32,135 37,325 32,680 31,615 37,555 3 4 1.41 1.4 1.37 1 36 1.35 1.33 1.27 1.22 1.18 1.17 1.14 1.12 3 3 4 3 2 4 0.8 95 86 92 22 83 72 77 77 76 73 79 73 82 69 74 3 0.79 0.76 0.78 0.71 0.83 0.73 0.7 0.81 3 3 2 3 2 3 2 1.1 1.08 1.07 1.06 1.04 1.04 1 0.82 Sheet Sheet3 Predicted Reliability 20 74 71 70 80 74 21 68 1.25 1 sire 2 Toyota Corolla (base, manual) Small Sedan 3 Mardai Touring (manual) Small Sedan 4 Toyota Corolla Small sedan 5 Marda3i Touring Small Sedan 6 Hyundai Elantra GLS Small Sedan 7 Nissan Sentra 2.0 SL Small Sedan 8 Kia Forte Sedan EX Small Sedan 9 Ford Focus SE Small Sedan 10 Ford Fiesta SE Small Sedan 11 Volkswagen letta SE (2.5) Small Sedan 12 Volkswagen Jetta TDI Small Sedan 13. Chevrolet Cruze LS (1.8) Small Sedan 14 Chevrolet Cruze ILT (1.4) Small Sedan 15 Nissan Altima 255(4-cyl.) Family Sedan 15 Kia Optima LX 2,4 Family Sedan 17 Subaru Legacy 2.51 Premium Family Sedan 18 Ford Fusion Hybrid Family Sedan 19 Honda Accord LX.P (4 cyl) Family Sedan 20 Marda6 i Sport (4-cyl.) Family Sedan 21 Hyundai Sonata GLS (2.4) Family Sedan 22 Ford Fusion SE (4-cyl.) Family Sedan 23 Chevrolet Malibu LT (4 cyl.) Family Sedan 24 Kia Optima SX 2017 Family Sedan 25 Ford Fusion SEL (VG) Family Sedan 26 Nissan Altima 3.5 SR (6) Family Sedan 27 Hyundai Sonata Limited (2.0T) Family Sedan Sheet2 Sheet4 Sheets 0.52 Price (5) Cost/Mile Road Test Score 16,419 0.44 18,895 0.5 18,404 0.42 19,745 0.52 18.445 0.53 20,150 0.57 19,040 0.57 20,280 0.52 16,595 0.47 20,300 0.54 25,100 0.5 18,375 20,530 23,970 21,885 23,830 0.59 32,360 0.63 23,730 0.56 22,035 0.58 21,800 0.56 23,625 0.57 24, 115 0.52 29,050 0.72 28,400 0.67 30,335 0.69 28,090 0.66 61 60 68 67 69 91 0.6 0.59 Value Score 4 1.99 5 1.04 4 1.89 5 1.82 3 1.64 4 1.51 3 1.32 2 13 2 3 1.24 2 1.18 1 0.96 1 0.91 4 1.75 4 1.73 4 1.73 5 17 4 1.62 4 1.6 3 1.58 4 155 3 1.48 4 1.43 4 1.42 4 1.42 3 1.39 0.58 81 83 84 80 23 89 76 74 84 80 93 89 a 3 89 90 81 75 88 83 52 4 4 1.39 1.36 1.14 132 1.29 1.2 1.2 LOS 3 3 5 3 1.45 5 5 63 91 82 84 86 83 84 5 0.66 0.67 0.74 0.71 0.71 0.62 0.7 0.67 0.77 0.75 0.75 0.73 0.75 0.62 0.79 0.73 0.78 0.76 0.78 0.65 4 4 27 Hyundai Sonata Limited (2.0T) 28 Honda Accord EX-L (6) 29 Mazda6 s Grand Touring (V6) 30 Ford Fusion SEL (V6, AWD) 31 Subaru Legacy 3.6R Limited 32 Chevrolet Malibu LTZ (V6) 83 Chrysler 200 Limited (V6) 34 Chevrolet Impala LT (3.6) 35 Lexus ES 350 36 Acura TL (base) 37 Lexus IS 250 38 Infiniti G25 Journey 39 Lexus 5 250h Premium 40 Acura TSX (4-cyl.) 41 Infiniti G37 Journey 42 Toyota Avalon Limited 43 Hyundai Genesis 3.8 44 Volvo S60 T5 45 Nissan Maxima 3.5 SV 46 Buick Regal CXL (2.4) 47 Lincoln MKZ 48 BMW 328i 49 Audi A4 Premium Quattro 50 Ford Taurus Limited 51 Buick Regal CXL (turbo) 52 Mercedes-Benz 300 Sport 53 Volkswagen CC Luxury (2.0T) 54 Saab 9-3 2.0T 55 Buick Lacrosse CXS (16) 56 Shell Sheet2 Family Sedan Family Sedan Family Sedan Family Sedan Family Sedan Family Sedan Family Sedan Family Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan Upscale Sedan 28,090 28,695 30,790 30,055 30,044 28,015 27,825 28,995 38,615 36,465 33,734 34,225 38,939 29,675 37,225 35,485 39,850 35,100 33,700 28,840 37,160 39,175 35,895 34,980 32,135 37,325 32,680 31,615 37,555 3 4 1.41 1.4 1.37 1 36 1.35 1.33 1.27 1.22 1.18 1.17 1.14 1.12 3 3 4 3 2 4 0.8 95 86 92 22 83 72 77 77 76 73 79 73 82 69 74 3 0.79 0.76 0.78 0.71 0.83 0.73 0.7 0.81 3 3 2 3 2 3 2 1.1 1.08 1.07 1.06 1.04 1.04 1 0.82 Sheet Sheet3