2e Slide # 48 Appendix 2A: Multiple Regression Example ددعتÙ
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Regress total costs on the number of machine hours to get the following output and estimated cost function: Predicted project costs = – $173 + ($113/mach hr) x (# mach hrs) The explanatory power is 62.1%. The intercept shows up negative
which is impossible as total fixed costs can not be negative. However
the p-value on the intercept tells us that there is a 93% probability that the true intercept is zero. The # of machine hours is significant.