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Can someone help me do this? I would appreciate it a lot!Case Problem 3Finding the Best Car ValueWhen trying to decide what car to buy, real value is not necessarily determined by how much you spend o

Can someone help me do this? I would appreciate it a lot!

Case Problem 3Finding the Best Car Value

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 don’t 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 , 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 tests and evaluations and are based on a -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 for a Lexus LS 460L. Predicted-reliability ratings ( , , , , and ) are based upon data from Consumer Reports’ Annual Auto Survey.

A car with a value score of is considered to be an “average-value” car. A car with a value score of is considered to be twice as good a value as a car with a value score of ; a car with a value score of is considered half as good as average; and so on. The data for three sizes of cars ( small sedans, family sedans, and upscale sedans), including the price ( ) of each car tested, are contained in the file named CarValues (Consumer Reports website, April 18, 2012). To incorporate the effect of size of car, a categorical variable with three values (small sedan, family sedan, and upscale sedan), use the following dummy variables:

Managerial Report

  1. Treating Cost/Mile as the dependent variable, develop an estimated regression with Family-Sedan and Upscale-Sedan as the independent variables. Discuss your findings.
  2. Treating Value Score as the dependent variable, develop an estimated regression equation using Cost/Mile, Road-Test Score, Predicted Reliability, Family-Sedan, and Upscale-Sedan as the independent variables.
  3. Delete any independent variables that are not significant from the estimated regression equation developed in part 2 using a level of significance. After deleting any independent variables that are not significant, develop a new estimated regression equation.
  4. 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?
  5. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the value of the Road-Test Score.
  6. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the Predicted Reliability.
  7. What conclusions can you derive from your analysis?

CarSizePrice ($)Cost/MileRoad-Test ScorePredicted ReliabilityValue Score

Toyota Corolla (base, manual)Small Sedan16,4190.447041.99

Mazda3 i Touring (manual)Small Sedan18,8950.507451.94

Toyota Corolla LESmall Sedan18,4040.477141.89

Mazda3 i TouringSmall Sedan19,7450.527051.82

Hyundai Elantra GLSSmall Sedan18,4450.538031.64

Nissan Sentra 2.0 SLSmall Sedan20,1500.577441.51

Kia Forte Sedan EXSmall Sedan19,0400.577131.32

Ford Focus SESmall Sedan20,2800.526821.30

Ford Fiesta SESmall Sedan16,5950.476121.25

Volkswagen Jetta SE (2.5)Small Sedan20,3000.546031.24

Volkswagen Jetta TDISmall Sedan25,1000.506821.18

Chevrolet Cruze LS (1.8)Small Sedan18,3750.576710.96

Chevrolet Cruze 1LT (1.4T)Small Sedan20,5300.606910.91

Nissan Altima 2.5 S (4-cyl.)Family Sedan23,9700.599141.75

Kia Optima LX (2.4)Family Sedan21,8850.588141.73

Subaru Legacy 2.5i PremiumFamily Sedan23,8300.598341.73

Ford Fusion HybridFamily Sedan32,3600.638451.70

Honda Accord LX-P (4-cyl.)Family Sedan23,7300.568041.62

Mazda6 i Sport (4-cyl.)Family Sedan22,0350.587341.60

Hyundai Sonata GLS (2.4)Family Sedan21,8000.568931.58

Ford Fusion SE (4-cyl.)Family Sedan23,6250.577641.55

Chevrolet Malibu LT (4-cyl.)Family Sedan24,1150.577431.48

Kia Optima SX (2.0T)Family Sedan29,0500.728441.43

Ford Fusion SEL (V6)Family Sedan28,4000.678041.42

Nissan Altima 3.5 SR (V6)Family Sedan30,3350.699341.42

Hyundai Sonata Limited (2.0T)Family Sedan28,0900.668931.39

Honda Accord EX-L (V6)Family Sedan28,6950.679031.36

Mazda6 s Grand Touring (V6)Family Sedan30,7900.748141.34

Ford Fusion SEL (V6, AWD)Family Sedan30,0550.717541.32

Subaru Legacy 3.6R LimitedFamily Sedan30,0940.718831.29

Chevrolet Malibu LTZ (V6)Family Sedan28,0450.678331.20

Chrysler 200 Limited (V6)Family Sedan27,8250.705251.20

Chevrolet Impala LT (3.6)Family Sedan28,9950.676331.05

Lexus ES 350Upscale Sedan38,6150.779151.45

Acura TL (base)Upscale Sedan36,4650.758251.41

Lexus IS 250Upscale Sedan33,7340.758451.40

Infiniti G25 JourneyUpscale Sedan34,2250.738641.37

Lexus HS 250h PremiumUpscale Sedan38,9390.758341.36

Acura TSX (4-cyl.)Upscale Sedan29,6750.678431.35

Infiniti G37 JourneyUpscale Sedan37,2250.799541.33

Toyota Avalon LimitedUpscale Sedan35,4850.738631.27

Hyundai Genesis 3.8Upscale Sedan39,8500.789231.22

Volvo S60 T5Upscale Sedan35,1000.767741.18

Nissan Maxima 3.5 SVUpscale Sedan33,7000.788331.17

Buick Regal CXL (2.4)Upscale Sedan28,8400.657721.14

Lincoln MKZUpscale Sedan37,1600.807741.12

BMW 328iUpscale Sedan39,1750.797731.10

Audi A4 Premium QuattroUpscale Sedan35,8950.767631.08

Ford Taurus LimitedUpscale Sedan34,9800.787331.07

Buick Regal CXL (turbo)Upscale Sedan32,1350.717921.06

Mercedes-Benz C300 SportUpscale Sedan37,3250.837731.04

Volkswagen CC Luxury (2.0T)Upscale Sedan32,6800.738221.04

Saab 9-3 2.0TUpscale Sedan31,6150.706931.00

Buick LaCrosse CXS (V6)Upscale Sedan37,5550.81742

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