Microsoft Office Tutorials and References
In Depth Information
Multi-Regression
Note that the calculated value 653.4118 is very close the original observed value
of 656. This original value is higher by about 2.88 ($2,880) of the forecasted/cal-
culated value.
Excel calls the calculated value Predicted Price.
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The differences are called Residuals.
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If you recall we requested the Residuals on the Regression menu of Figure 14.7 to
calculate these Residuals. This resulted in the Predicted Price and the Residuals for all
the apartments on the list. See Figure 14.9 for a partial list.
The Residuals are the calculated difference of the actual price from the predicted
price computed by the model. It helps you understand how close your forecasts to the
actual values are.
Refer back to the Regression results in Figure 14.8. What the model reveals are
the following:
Every additional square foot adds approximately $467.80 to the value of the
apartment.
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Each additional bathroom adds approximately $66,961.80 to the price.
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A city address adds $38,543.30 value to the asset.
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Corner apartment is worth $20,643.90 more than a conventional one.
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In addition, having a balcony adds $11,370.50 to the value.
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FIGURE 14.9 Partial Lists of Predicted Price and Residuals
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