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