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2014

Effect on the selling price (dependant variable) with


changes in independent variables of different cars models

Course: BUS 511


BUSINESS STATISTICS
Section: 2

Prepared For: Dr. Kais Zaman

Prepared By:
Name

I.D. NO

Imran Hossain

132 1071 660


133 0802 660

Abu Hanif Muhammad Saeem Khan


112 0542 460
Rajiv Shamim

Date of submission: 25th April, 2014

Table of Content
SL

Topic

Page

Introduction

Background

03

Variables

05

Statistical Approaches

10

08

Data sheet

11

Descriptive statistics

21

28

Regression Analysis

24

32

Correlations

29

35

One way ANOVAs

30

10

Hypothesis testing

32

11

Findings

41

12

Conclusion

42

13

Reference

43

ACKNOWLEDGEMENT

First of all we would like to express our sincere gratitude to almighty Allah that we have
successfully completed our report.

We would like to thank our honorable teacher of the Business Statistics course, Dr.Kais Zaman
for giving us this opportunity and help needed to prepare this report.

Finally, we would like to thanks our class mates for their cooperative attitude which guided us
to recover the problems regarding our report.

25th April, 2014


To
Dr.Kais Zaman
Associate Professor

Subject: Submission of Project Report

Dear Sir,
It is our great honor to submit our project report on Effect on the selling price (dependant
variable) with changes in independent variables of different cars models. In this endeavor, this
report seeks to identify and analyze the relationships among the variables. The report contains
statistical analysis and some findings and recommendations. It would be our enormous pleasure
if you find this report useful and informative to have an apparent perspective on the issue.

Thanking you
1. Imran Hossain

ID - 1321071660

2. Rajiv Shamim

ID -1120542460

3. Abu Hanif Muhammad Saeem Khan

ID - 1330802660

1. Introduction
1.1Origin of the Report:
BUS 511 is a statistics course offered in the MBA program of NSU in order to equip students
with the statistical tools. The project was initiated so that the students would get a practical
exposure of statistical analysis in a project work. Different types of statistical tools were used
in this project to find out the results.

1.2 Problem Statement:


Automobile is an important and fast growing industry around the globe. So the selling price
of a car is always a good interest for people. In this report we showed different variables of
cars, which are affecting the selling price of a car. We have used different car models and
different models as our sample data. There are many variables that affect the selling price of
a branded car. We have chosen 4 of these for analyzing the selling price of the 33 different
models of car.
Here in this paper a model is to be set up to establish the relationship among the variables
and the different cars selling price. The variables used in this report are given below:
Engine displacement- Cubic Centimeters (CC)
Horse power (HP)
Fuel Miles per gallon (MPG)
Wheel /Drive

1.3 Objectives of the study:


To find out the level of impact and relationship between Cubic centimeters and Cars
selling price.
To find out the level of impact and relationship between Horse power and Cars
selling price.
To find out the level of impact and relationship between Fuel miles per gallon and
Cars selling price.

To find out the level of impact and relationship between Wheel drive and Cars
selling price.
Regression analysis of 4 independent variables with the dependent variable
Testing usefulness of the model
Testing partial regression co efficient
Testing correlation co efficient
To get a practical exposure of statistical analysis

1.4 Methodology:
The data used in this report is collected from different car showrooms in the city. These
include the sole agents of the company in the city such as Pacific Motors BD for Nissan and
Hyundai, Navana 3s for Toyota, Honda and some local car dealers. In total 33 car models are
used as a sample variables. After collecting the data we analyzed the data with the help of
statistical software (Minitab 17). The collected data was first summarized and presented
graphically. Then we tested some hypothesis about the population mean for each of the
variables. After that, we calculated the correlations by using Minitab software among
different variables, to see the strength of their relationship. Then we tested hypothesis of
correlation coefficient. Then we extended the relationships to a multiple regression model.
After that we tested some hypothesis of partial regression coefficient and finally we tested
the usefulness of the regression model.

2. Background
2.1 History of the Automobile industry
The history of the automobile begins as early as 1769, with the creation of steam engine
automobiles capable of human transport. In 1806, the first cars powered by an internal
combustion engine running on fuel gas appeared, which led to the introduction in 1885 of the
ubiquitous modern gasoline- or petrol-fueled internal combustion engine. Cars powered by
electric power briefly appeared at the turn of the 20th century, but largely disappeared from
use until the turn of the 21st century. The early history of the automobile can be divided into
a number of eras, based on the prevalent means of propulsion. Later periods were defined by
trends in exterior styling, and size and utility preferences.

2.2 Global Automobile Sales:

2.3 Car brands used as sample data in the analysis:

3. Variables
3.1 Explanation of test parameters
There are total 5 variables in this project. Among them 1 is dependent variable and other 4 is
independent variables. Car selling is always been an interesting thing for the one who wants
to buy it. So Car selling price is our dependent variable in this report. 4 variables are
affecting the car selling price, so these are the independent variables. These independent
variables are given below:
Engine Displacement- Cubic Centimeters (CC)
Horse power (HP)
Fuel Miles per gallon (MPG)
Wheel /Drive

3.2 Dependent variable


In our case a branded cars selling price is the dependent variable. The price of the car at the
showroom is the selling price. This is a dependent variable, because it may be affected by
several independent variables.

3.3 Independent variables


Factors that are affecting the car selling price are the independent variables. We have 4
independent variables for this report.
Cubic Centimeters (CC)
Cubic Centimeters is the total volume of all cylinders at full stroke. In cars its ci's Cubic
Inches. The higher the cc's, the larger and more powerful the engine.
Horse power (HP)
Horsepower (hp) is the name of several units of measurement of power. Horsepower was
originally defined to compare the output of steam engines with the power of draft horses in
continuous operation. The unit was widely adopted to measure the output of piston engines,
turbines, electric motors, and other machinery. The definition of the unit varied between
geographical regions. Most countries now use the SI unit watt for measurement of power.
Difference between CC and Horsepower (HP):
Many people ask for a relationship between horsepower and cc or how many cc in a hp. The short
answer is about 15 to 17cc = 1 hp or about 1 cu.in. = 1 bhp for a modern car. The full answer is
complex - the power output of an engine depends on the state of tune as well as size, and the definition
of horsepower must be considered, brake horsepower (bhp) or shaft horsepower (shp), and is not
covered here. Horsepower can be increased by engine tuning, more volatile fuel, supercharging or
exhaust turbo boosting. As can be seen from the table below, the top 10 highly tuned engines cover a
wide variety from Formula 1 racing cars and dragsters, through TT and motocross bikes to a tiny 3.5cc
model car engine producing 3.45hp at a screaming 42,600 rpm and weighing in at 340 grams.

Note:1 cubic inch ( cu.in. ) = 16.387064 cubic centimetres ( cu.cm. cm3 or cc )


1000 cc = 1 litre
1 hp (UK) = 0.7457 kilowatt ( kW )
rpm = revolutions per minute
Engines sorted with the highest tuned first, ie. with the lowest cu.cm to horsepower ratio

engine

cc

hp

rpm

cc / hp

Model car 2 stroke diesel - Rossi 236R21

3.5

3.45

42,600

1.0145

Top fuel dragster V8 supercharged

8194

8000+

8 200

1.0243

F1 racing car 1987 turbo - qualifying

1494

1400+

14 000

1.0671

F1 racing car 1987 turbo - race trim - Honda

1494

1000

13 000

1.4940

Honda TT race bike

125

47

Model aircraft - Chinese contest diesel

3.5

1.3

26 000

2.6923

Model aircraft - Typhoon Russian diesel

2.47

0.82

27 200

3.0122

BMW F1 racing car 2003 - P83

2998

920

19 200

3.2587

Motocross bike

125

33

3.7879

Honda - stock road bike

125

33

3.7879

F1 racing car 1995 - no turbo

3000

750

4.0000

2.6596

This table shows that two cars having the same cc can have different horse powers so both cc and
horsepower are not directly related to each other.
Data source: http://www.simetric.co.uk/si_cc2hp.htm

Fuel Miles per gallon (MPG)


Efficiency is defined as output per input. In automobiles it is the distance traveled per unit of
fuel used; in miles per gallon (mpg) or kilometers per liter (km/L), commonly used in the
UK, US (mpg) and Japan, Korea, India, Pakistan, parts of Africa, The Netherlands, Denmark
and Latin America (km/L). If mpg is used the gallon should be identified.
Wheel /Drive
A drive wheel is a road wheel in an automotive vehicle that receives torque from the power
train, and provides the final driving force for a vehicle. A two-wheel drive vehicle has two
driven wheels, and a four-wheel drive has four, and so-on. A steer wheel is one that turns to
change the direction of a vehicle. A trailer wheel is one that is neither a drive wheel nor a
steer wheel.

Two wheel drive

For four-wheeled vehicles, this term is used to describe vehicles that are able to transmit
torque to at most two road wheels, referred to as either front- or rear-wheel drive. The term
4x2 is also used, to indicate four total road-wheels with two being driven.

Four-wheel drive or All-wheel drive

Four-wheel drive, 4WD, 4x4 ("four-by-four"), all-wheel drive, and AWD are terms used to
describe a four-wheeled vehicle with a drive train that allows all four road wheels to receive
torque from the internal combustion engine simultaneously. While some people associate the
term with off-road vehicles - powering all four wheels provides better control, and therefore
safety on slick ice, and is an important part of rally racing on mostly-paved roads.

Front-wheel drive

Front-wheel drive (or FWD for short) is the most common form of internal combustion
engine / transmission layout used in modern passenger cars, where the engine drives the front
wheels. Most front wheel drive vehicles today feature transverse engine mounting, whereas

in past decades engines were mostly positioned longitudinally instead. Rear-wheel drive was
the traditional standard, and is still widely used in luxury cars and most sport cars. Fourwheel drive is also sometimes used. See also Front-engine, front-wheel drive layout.

Rear-wheel drive

Rear-wheel drive (or RWD for short) was a common internal combustion engine /
transmission layout used in automobiles throughout the 20th century.

4. Statistical Approaches
4.1 Theoretical Model:
Dependent variable: Cars selling price (Y)
Independent variable: X1, X2, X3, X4
Car selling price, Y= f (X1, X2, X3, X4)
The analysis would be based on different variables of cars and the internal relationship of
their characteristics with the cars selling price.

4.2 Regression Model:


A multiple regression equation was drawn as follows on the basis of Least Square Method:
= b0+b1x1+b2x2+b3x3+b4x4
Where, = Car selling price ($)
X1= Cubic Centimeters (CC)
X2 = Horse power (HP)
X3 = Fuel Miles per gallon (MPG)
X4 = Wheel /Drive

4.3 Hypothesis:
H1:

Cubic Centimeters (CC) has impact on car selling price

H2:

Horse power (HP) has impact on car selling price

H3:

Fuel Miles per gallon (MPG) has impact on car selling price

H4:

Wheel /Drive has impact on car selling price

4.4 Sample size


Considering time and other limitations, we found that it would be most appropriate to work
with 33 car model of different brands.
Number of observations, n= 33
Variables: {X1, X2, X3, X4, }

4.5 Data Sheet


No.

Car Model

Selling
Price

CC

HP

in

Fuel

Wheel

(MPG)

/Drive

BDT
1

2013

NISSAN 16500000

5700

381

15

NISSAN 9500000

4000

270

19

2850000

1500

135

28

2800000

1500

135

28

PATROL
2

2012
MURANO

2012

Toyota

Premio G
4

2012 Toyota Allion

2012

NISSAN 1650000

1300

132

25

SUNNY
6

2013Toyota Yaris

1750000

1299

132

30

2013 Toyota Prius 3450000

1800

165

65

8200000

2500

231

66

NISSAN 2300000

2000

132

46

NISSAN 2650000

1800

98

50

Hybrid
8

2013 Toyota Camry


Hybrid

2012
SYLPHY

10

2012

BLUEBIRD
11

Kia Sportage 2013

5200000

2400

115

39

12

2012 NISSAN X- 6400000

1800

98

42

2500

179

24

1450000

1300

132

30

NISSAN 4500000

3500

266

21

2362

159

26

4500

310

15

2982

182

21

1500

132

22

2694

270

17

TRAIL
13

2012

NISSAN 4550000

CEFIRO
14

Toyota Avanza

15

2012

PATHFINDER
Hybrid
16

2013 Toyota Rav4

4200000

17

Toyota Landcruiser 40000000


200

18

Toyota Prado 2013

19

2012

13200000

NISSAN 1750000

SUNNY 1.5
20

2012
Fortuner

Toyota 9000000

21

2011

NISSAN 5700000

3500

268

20

NISSAN 2250000

2500

169

22

Hyundai 4500000

2400

179

28

1500000

1200

105

30

NISSAN 5200000

3500

270

17

DUALIS
22

2011
TEANA

23

2013
Sonata

24

Hyundai i10

25

2011
SKYLINE

26

Hyundai Eon

1150000

814

95

35

27

2013 KIA optima

6300000

2400

175

27

28

Toyota Vista 2000

1700000

1800

132

22

29

Toyota Corolla G 1600000

1600

127

28

2012
30

Honda 2014 CRV

8400000

2500

179

22

31

Honda City

1950000

1300

120

30

32

Honda Accord 2013

2800000

2400

185

24

33

Mitsubishi

Pajero 6900000

2700

175

25

Sport 2013

4.6 Graphs
4.6.1Histogram: A histogram is a graphical representation of the distribution of data. It is an
estimate of the probability distribution of a continuous variable. A histogram is a representation
of tabulated frequencies, shown as adjacent rectangles, erected over discrete intervals, with an
area proportional to the frequency of the observations in the interval. The total area of the
histogram is equal to the number of data.

Histogram of Selling Price in BDT


Normal
16

Mean 5813636
StDev 7094719
N
33

14

Frequency

12
10
8
6
4
2
0
-10000000

10000000

20000000

Selling Price in BDT

30000000

40000000

Histogram of CC
Normal
12

Mean 2350
StDev 1052
N
33

10

Frequency

1000

2000

3000

4000

5000

CC

Histogram of HP
Normal
Mean 176.8
StDev 69.52
N
33

12

Frequency

10

80

160

240

HP

320

400

Histogram of Fuel (MPG)


Normal
9

Mean 29.06
StDev 12.48
N
33

8
7

Frequency

6
5
4
3
2
1
0

10

20

30

40

50

60

Fuel (MPG)

Histogram of Wheel /Drive


Normal
Mean 2.788
StDev 0.9924
N
33

20

Frequency

15

10

Wheel /Drive

4.6.2 Scatter diagram: The scatter plot is widely used to present measurements of two or more
related variables. It is particularly useful when the variables of the y-axis are thought to be
dependent upon the values of the variable of the x-axis (usually an independent variable).In a
scatter plot, the data points are plotted but not joined; the resulting pattern indicates the type and
strength of the relationship between two or more variables.

Scatterplot of Selling Price in BDT vs CC

Selling Price in BDT

40000000

30000000

20000000

10000000

0
1000

2000

3000

4000

5000

6000

CC

Scatterplot of Selling Price in BDT vs HP

Selling Price in BDT

40000000

30000000

20000000

10000000

0
100

150

200

250

HP

300

350

400

Scatterplot of Selling Price in BDT vs Fuel (MPG)

30000000

20000000

10000000

0
10

20

30

40

50

60

70

Fuel (MPG)

Scatterplot of Selling Price in BDT vs Wheel /Drive


40000000

Selling Price in BDT

Selling Price in BDT

40000000

30000000

20000000

10000000

0
2.0

2.5

3.0

Wheel /Drive

3.5

4.0

4.6.3Probability Plot: The normal probability plot is a graphical technique for normality testing:
assessing whether or not a data set is approximately normally distributed. The data are plotted
against a theoretical distribution in such a way that the points should form approximately a
straight line. Departures from this straight line indicate departures from the specified distribution.

5. Descriptive statistics
5.1 Descriptive Statistics: Selling Price, CC, HP, Fuel (MPG), wheel drive
Descriptive Statistics: Selling Price in BDT, CC, HP, Fuel (MPG), Wheel /Drive
Variable
Q3
Selling Price in BDT
6650000
CC
2697
HP
208.0
Fuel (MPG)
30.00
Wheel /Drive
4.000
Variable
Selling Price in BDT
CC
HP
Fuel (MPG)
Wheel /Drive

N*

Mean

SE Mean

StDev

Minimum

Q1

Median

33

5813636

1235032

7094719

1150000

1850000

4200000

33

2350

183

1052

814

1500

2400

33

176.8

12.1

69.5

95.0

132.0

165.0

33

29.06

2.17

12.48

15.00

21.50

26.00

33

2.788

0.173

0.992

2.000

2.000

2.000

Maximum
40000000
5700
381.0
66.00
4.000

5.2 Summary
Summary Report for Selling Price in BDT
Anderson-Darling Normality Test
A-Squared
P-Value
Mean
StDev
Variance
Skewness
Kurtosis
N
Minimum
1st Quartile
Median
3rd Quartile
Maximum

3.85
<0.005
5813636
7094719
5.03350E+13
3.8000
17.3185
33
1150000
1850000
4200000
6650000
40000000

95% Confidence Interval for Mean


0

10000000

20000000

30000000

40000000

3297958

8329314

95% Confidence Interval for Median


2474103

5451281

95% Confidence Interval for StDev


5705496

9384136

95% Confidence Intervals


Mean

Median
2000000

3000000

4000000

5000000

6000000

7000000

8000000

Summary Report for CC


Anderson-Darling Normality Test
A-Squared
P-Value
Mean
StDev
Variance
Skewness
Kurtosis
N
Minimum
1st Quartile
Median
3rd Quartile
Maximum

0.97
0.013
2350.0
1052.3
1107243.8
1.26155
2.06613
33
814.0
1500.0
2400.0
2697.0
5700.0

95% Confidence Interval for Mean


1000

2000

3000

4000

1976.9

5000

2723.1

95% Confidence Interval for Median


1800.0

2500.0

95% Confidence Interval for StDev


846.2

95% Confidence Intervals


Mean

Median
1800

2000

2200

2400

2600

2800

1391.8

Summary Report for HP


Anderson-Darling Normality T est
A-Squared
P-Value

1.57
<0.005

Mean
StDev
Variance
Skewness
Kurtosis
N

176.76
69.52
4833.44
1.17036
0.94583
33

Minimum
1st Quartile
Median
3rd Quartile
Maximum

95.00
132.00
165.00
208.00
381.00

95% Confidence Interval for Mean


80

160

240

320

152.11

400

201.41

95% Confidence Interval for Median


132.00

179.00

95% Confidence Interval for StDev


55.91

91.96

95% Confidence Intervals


Mean

Median
140

160

180

200

Summary Report for Fuel (MPG)


Anderson-Darling Normality Test
A-Squared
P-Value

2.03
<0.005

Mean
StDev
Variance
Skewness
Kurtosis
N

29.061
12.485
155.871
1.71811
2.90649
33

Minimum
1st Quartile
Median
3rd Quartile
Maximum

15.000
21.500
26.000
30.000
66.000

95% Confidence Interval for Mean


20

30

40

50

24.634

60

33.488

95% Confidence Interval for Median


22.000

29.005

95% Confidence Interval for StDev


10.040

95% Confidence Intervals


Mean

Median
22

24

26

28

30

32

34

16.514

Summary Report for Wheel /Drive


Anderson-Darling Normality T est
A-Squared
P-Value
Mean
StDev
Variance
Skewness
Kurtosis
N
Minimum
1st Quartile
Median
3rd Quartile
Maximum

6.12
<0.005
2.7879
0.9924
0.9848
0.45507
-1.91285
33
2.0000
2.0000
2.0000
4.0000
4.0000

95% Confidence Interval for Mean


2

2.4360

3.1398

95% Confidence Interval for Median


2.0000

4.0000

95% Confidence Interval for StDev


0.7981

1.3126

95% Confidence Intervals


Mean

Median
2.0

2.5

3.0

3.5

4.0

6. Regression Analysis: A regression analysis is a statistical process for estimating the


relationships among variables. It includes many techniques for modeling and analyzing several
variables, when the focus is on the relationship between a dependent variable and one or more
independent variables. More specifically, regression analysis helps one understand how the
typical value of the dependent variable changes when any one of the independent variables is
varied, while the other independent variables are held fixed. In regression analysis, it is also of
interest to characterize the variation of the dependent variable around the regression function
which can be described by a probability distribution. The p-value for each term tests the null
hypothesis that the coefficient is equal to zero (no effect). A low p-value (< 0.05) indicates that
we can reject the null hypothesis. In other words, a predictor that has a low p-value is likely to be
a meaningful addition to our model because changes in the predictor's value are related to
changes in the response variable. Conversely, a larger (insignificant) p-value suggests that
changes in the predictor are not associated with changes in the response. Typically, we use the
coefficient p-values to determine which terms to keep in the regression model.

Regression Analysis: Selling Price in BDT versus CC, HP, Fuel (MPG), Wheel /Drive

Regression Equation:
Selling Price in BDT = -6269746 + 4113 CC + 480 HP - 4486 Fuel (MPG)
+ 883610 Wheel /Drive
Explanation:
bo = -6269746, it will always remain constant.
For a single unit change of CC, the Car Selling Price will be changed 4113 units, and
the variables share a positive relationship to each other.
For a single unit change of HP, the car Selling Price will be changed 480units, and the
variables share a positive relationship to each other.
For a single unit change of Fuel (MPG), the car Selling Price will be changed 446 units,
and the variables share a negative relationship to each other.
For a single unit change of Wheel/Drive, the Car Selling Price will be changed
883610units, and the variables share a positive relationship to each other.

Predictor
Constant

Coef
-6269746

SE Coef

T-value

P-value

4584915

-1.37

0.182

2641

1.56

0.131

CC

4113

HP

480

36687

0.01

0.990

Fuel (MPG)

-4486

86150

-0.05

0.959

Wheel/Drive

883610

1276072

0.69

0.494

Regression Table

S = 5398952 R-Sq = 49.33% R-Sq(adj) = 42.09% R-sq(pred) = 27.36%


The coefficient of determination (R2) and the adjusted value was found to be 49.33% and
42.09% respectively. That means the Selling Price can be explained 49.33% by CC, HP, Fuel
(MPG) and Wheel/Drive.

Minitab Output:
Regression Equation
Selling Price in BDT = -6269746 + 4113 CC + 480 HP - 4486 Fuel (MPG) + 883610 Wheel /Drive
Analysis of Variance
Source
Regression
CC
HP
Fuel (MPG)
Wheel /Drive
Error
Lack-of-Fit
Pure Error
Total

DF
4
1
1
1
1
28
27
1
32

Adj SS
7.94558E+14
7.06797E+13
4993542516
79043102586
1.39762E+13
8.16163E+14
8.16162E+14
1250000000
1.61072E+15

Adj MS
1.98640E+14
7.06797E+13
4993542516
79043102586
1.39762E+13
2.91487E+13
3.02282E+13
1250000000

F-Value
6.81
2.42
0.00
0.00
0.48

P-Value
0.001
0.131
0.990
0.959
0.494

24182.58

0.005

Model Summary
S
5398952

R-sq
49.33%

R-sq(adj)
42.09%

R-sq(pred)
27.36%

Coefficients:
Term
Constant
CC
HP
Fuel (MPG)
Wheel /Drive

Coef
-6269746
4113
480
-4486
883610

SE Coef
4584915
2641
36687
86150
1276072

T-Value
-1.37
1.56
0.01
-0.05
0.69

P-Value
0.182
0.131
0.990
0.959
0.494

Fits and Diagnostics for Unusual Observations


Obs
8
17
R
X

Selling
Price in BDT
8200000
40000000

Large residual
Unusual X

Fit
7361820
15854387

Resid
838180
24145613

Std
Resid
0.23
4.89

X
R

VIF
8.48
7.14
1.27
1.76

Fitted Line Plot


Selling Price in BDT = - 5214286 + 4693 CC
S
R-Sq
R-Sq(adj)

Selling Price in BDT

40000000

5175848
48.4%
46.8%

30000000

20000000

10000000

0
1000

2000

3000

4000

5000

6000

CC

The graph shows that for 1 unit increase in CC the selling price increases by 4693 units.

Fitted Line Plot


Selling Price in BDT = - 5746294 + 65400 HP
S
R-Sq
R-Sq(adj)

Selling Price in BDT

40000000

5533401
41.1%
39.2%

30000000

20000000

10000000

0
100

150

200

250

300

350

400

HP

The graph shows that for 1 unit increase in HP the selling price increases by 65400 units.

Fitted Line Plot


Selling Price in BDT = 10453817 - 159673 Fuel (MPG)
S
R-Sq
R-Sq(adj)

Selling Price in BDT

40000000

6917845
7.9%
4.9%

30000000

20000000

10000000

0
10

20

30

40

50

60

70

Fuel (MPG)

The graph shows that for 1 unit increase in Fuel (MPG) the selling price changes by -159673
units.

Fitted Line Plot


Selling Price in BDT = - 4425385 + 3672692 W heel /Drive
S
R-Sq
R-Sq(adj)

Selling Price in BDT

40000000

6184330
26.4%
24.0%

30000000

20000000

10000000

0
2.0

2.5

3.0

3.5

4.0

W heel /Drive

The graph shows that for 1 unit increase in WHEEL/DRIVE the selling price increases by
3672692 units.

7. Correlations: The correlation coefficient is a measure of linear association between two


variables. Values of the correlation coefficient are always between -1 and +1. A correlation
coefficient of +1 indicates that two variables are perfectly related in a positive linear sense; a
correlation coefficient of -1 indicates that two variables are perfectly related in a negative linear
sense, and a correlation coefficient of 0 indicates that there is no linear relationship between the
two variables.

Correlation: Selling Price in BDT, CC


Pearson correlation of Selling Price in BDT and CC = 0.696
P-Value = 0.000

Correlation: Selling Price in BDT, HP


Pearson correlation of Selling Price in BDT and HP = 0.641
P-Value = 0.000

Correlation: Selling Price in BDT, Fuel (MPG)


Pearson correlation of Selling Price in BDT and Fuel (MPG) = -0.281
P-Value = 0.113

Correlation: Selling Price in BDT, Wheel /Drive


Pearson correlation of Selling Price in BDT and Wheel /Drive = 0.514
P-Value = 0.00

8. One way ANOVAs: One-way analysis of variance (one-way ANOVA) is a technique used to
compare means of two or more samples (using the F distribution). This technique can be used
only for numerical data.
The ANOVA tests the null hypothesis that samples in two or more groups are drawn from
populations with the same mean values. To do this, two estimates are made of the population
variance. These estimates rely on various assumptions. The ANOVA produces an F-statistic, the
ratio of the variance calculated among the means to the variance within the samples. If the group
means are drawn from populations with the same mean values, the variance between the group
means should be lower than the variance of the samples, following the central limit theorem. A
higher ratio therefore implies that the samples were drawn from populations with different mean
values.
One-way ANOVA: CC, HP, Fuel (MPG), Wheel /Drive
Method
Null hypothesis
Alternative hypothesis

All means are equal


At least one mean is different

Significance level

= 0.05

Equal variances were assumed for the analysis.


Factor Information
Factor
Factor

Levels
4

Values
CC, HP, Fuel (MPG), Wheel /Drive

Analysis of Variance
Source
Factor
Error
Total

DF
3
128
131

Adj SS
129296737
35591490
164888228

Adj MS
43098912
278059

F-Value
155.00

Model Summary
S
527.313

R-sq
78.41%

R-sq(adj)
77.91%

R-sq(pred)
77.04%

P-Value
0.000

Means
Factor
CC
HP
Fuel (MPG)
Wheel /Drive

N
33
33
33
33

Mean
2350
176.8
29.06
2.788

StDev
1052
69.5
12.48
0.992

95% CI
(
2168,
2532)
(
-4.9,
358.4)
( -152.57, 210.69)
(-178.841, 184.417)

Pooled StDev = 527.31


Result: Since the p-value is less than .05 level of significance, so the null
hypothesis is rejected that is all means are not equal.

Interval Plot of CC, HP, ...


95% CI for the Mean
2500

2000

Data

1500

1000

500

CC

HP

The pooled standard deviation was used to calculate the intervals.

Fuel (MPG)

Wheel /Drive

9. Hypothesis testing: Hypothesis testing or significance testing is a method for testing a claim
or hypothesis about a parameter in a population, using data measured in a sample. In this
method, we test some hypothesis by determining the likelihood that a sample statistic could have
been selected, if the hypothesis regarding the population parameter were true.
9.1 Hypothesis test for Mean
1. Car selling price
Mean (x) = 5800000, Standard Deviation (S) = 7094719, n = 33
Ho: = 5800000
HA: 5800000
Test Statistic:
z = x - o / s n
With = .05
And p value 0.991, which is greater than .05
Hence the Null Hypothesis Ho is not rejected.
Population mean of car selling price is equal to BDT 5800000.

2. CC
Mean (x) = 2300, Standard Deviation (S) =1052, n = 33
Ho: = 2300
HA: 2300
Test Statistic:
z = x - o / s n
With = .05
And p value 0.785, which is greater than .05
Hence the Null Hypothesis Ho is not rejected
Therefore the Population mean of CC is equal to 2300.

3. HP

Mean (x) = 176, Standard Deviation (S) = 69.52, n = 33

Ho: = 176
HA: 176
Test Statistic:
z = x - o / s n
With = .05
And p value 0.950, which is greater than .05
Hence the Null Hypothesis Ho is not rejected
Therefore, Population mean of HP is equal to 176

4. Fuel (MPG)

Mean (x) = 29, Standard Deviation (S) = 29.061, n = 33


Ho: = 29
HA: 29
Test Statistic:
z = x - o / s n
With = .05
And p value 0.978, which is greater than .05
Hence the Null Hypothesis Ho is not rejected
Therefore, Population mean of Fuel (MPG) is equal to 25.

5. Wheel drive

Mean (x) = 2, Standard Deviation (S) = 0.9942, n = 33


Ho: = 2
HA: 2
Test Statistic:
z = x - o / s n
With = .05
And p value 0.000, which is less than .05
Hence reject the Null Hypothesis Ho
Population mean of Wheel drive is not equal to 2.

9.2

Hypothesis Test for correlation coefficient

1. Car Selling price and CC


Hypothesis 1: Correlation exists between car selling price and CC
Ho: = 0
Ha: 0
Ho = There is no relationship between car selling price and CC
Ha = There is relationship exists between car selling price and CC
Test Statistic: here, r = 0.696 n = 33 = 0.05
P value 0.00 is less than .05
Hence Reject the Null Hypothesis Ho
So, there is relationship exists between car selling price and CC

2. Car Selling price and HP


Hypothesis 2: Correlation exists between car selling price and HP
Ho: = 0
HA: 0
Ho = There is no relationship between car selling price and HP
Ha = There is relationship exists between car selling price and HP
Test Statistic: here, r = 0.641 n = 33 = 0.05
P value 0.00 is less than .05
Hence Reject the Null Hypothesis Ho
So, there is relationship exists between car selling price and HP
3. Car Selling price and Fuel (MPG)
Hypothesis 3: Correlation exists between car selling price and Fuel (MPG)
Ho: = 0
HA: 0
Ho = There is no relationship between car selling price and Fuel (MPG)
Ha = There is relationship exists between car selling price and Fuel (MPG)
Test Statistic: here, r = -0.281 n = 33 = 0.05
P value 0.00 is less than .05
Hence Reject the Null Hypothesis Ho
So, there is relationship exists between car selling price and Fuel (MPG)

4. Car Selling price and Wheel drive


Hypothesis 5: Correlation exists between car selling price and Wheel drive
Ho: = 0
HA: 0
Ho = There is no relationship between car selling price and Wheel drive
Ha = There is relationship exists between car selling price and Wheel drive
Test Statistic: here, r = 0.514 n = 30 = 0.05
P value 0.061 is greater than .05
Hence accept the Null Hypothesis Ho
So, there is no relationship between car selling price and Wheel drive.
9.3

Hypothesis Test for partial regression coefficient


1. Car Selling price and CC
Hypothesis 1: CC is a valuable predictor in the presence of the other variables while
predicting cars selling price.
Ho: b 1 = 0
HA: b1 0
Ho = CC is not a valuable predictor in the presence of the other variables while predicting
cars selling price.
Ha = CC is a valuable predictor in the presence of the other variables while predicting
cars selling price.
Test Statistic: here, p value = .131 n = 33 = 0.05
P value .131 is larger than .05

Hence do not reject the Null Hypothesis Ho


So, we conclude that CC is a not a valuable predictor in the presence of the other
variables while predicting cars selling price.

2. Car Selling price and HP


Hypothesis 1: HP is a valuable predictor in the presence of the other variables while
predicting cars selling price.
Ho: b 1 = 0
HA: b1 0
Ho = HP is not a valuable predictor in the presence of the other variables while predicting
cars selling price.
Ha = HP is a valuable predictor in the presence of the other variables while predicting
cars selling price.
Test Statistic: here, p value =. 0.990 n = 33 = 0.05
P value = 0.990 is larger than .05
Hence do not reject the Null Hypothesis Ho
So, we conclude that HP not is a valuable predictor in the presence of the other variables
while predicting cars selling price.

3. Car Selling price and Fuel (MPG)


Hypothesis 1: Fuel (MPG) is a valuable predictor in the presence of the other
variables while predicting cars selling price.
Ho: b 1 = 0
HA: b1 0
Ho = Fuel (MPG) is not a valuable predictor in the presence of the other variables while
predicting cars selling price.
Ha = Fuel (MPG) is a valuable predictor in the presence of the other variables while
predicting cars selling price.
Test Statistic: here, p value = 0.959 n = 33 = 0.05
P value = 0.959 is larger than .05
Hence Do not Reject the Null Hypothesis Ho
So, we conclude that Fuel (MPG) is a not a valuable predictor in the presence of the other
variables while predicting cars selling price.

4. Car Selling price and Wheel drive


Hypothesis 1: Wheel drive is a valuable predictor in the presence of the other
variables while predicting cars selling price.
Ho: b 1 = 0
HA: b1 0
Ho = Fuel (MPG) is not a valuable predictor in the presence of the other variables while
predicting cars selling price.

Ha = Fuel (MPG) is a valuable predictor in the presence of the other variables while
predicting cars selling price.
Test Statistic: here, p value = 0.494 n = 33 = 0.05
P value = .494 is larger than .05
Hence do not reject the Null Hypothesis Ho
So, we conclude that Wheel drive is a not a valuable predictor in the presence of the other
variables while predicting cars selling price.

9.4

Testing the usefulness of the regression model

We are testing the F test for finding the regression model is useful or not.
Regression Analysis: Selling Price in BDT versus CC, HP, Fuel (MPG), Wheel /Drive

Ho: regression model is not useful in predicting the car selling price
HA: regression model is useful in predicting the car selling price
Ho: 1= 2= 3= 4= 5=0
HA: 1= 2= 3= 4= 50
Test statistics F = MSR/MSE

Analysis of Variance
Source

DF

Adj SS

Regression

Adj MS

F-Value

P-Value

1.98640E+14

6.81

0.001

7.94558E+14
CC

7.06797E+13

7.06797E+13

2.42

0.131

HP

4993542516

4993542516

0.00

0.990

79043102586

79043102586

0.00

0.959

Wheel

1.39762E+13

1.39762E+13

0.48

0.494

Error

28

8.16163E+14

2.91487E+13

Lack-of-Fit

27

8.16162E+14

3.02282E+13

24182.58

0.005

Pure Error

1250000000

1250000000

Total

32

1.61072E+15

Fuel (MPG)

So F value is 6.81 and P value is 0.001


P value is less than .05
Hence reject the null hypothesis
So we can conclude that regression model is useful in predicting the car selling price.

10. Findings
In this report we tried to find out the relationship and impact on the car selling price with 4
independent variables. We had 4 hypotheses about this report, these are given below,

H1:

Pearson correlation of Selling Price in BDT and CC = 0.696, so it a partial positive

Cubic Centimeters (CC) has impact on car selling price

relationship

H2:

Pearson correlation of Selling Price in BDT and HP = 0.641, so it a partial positive

Horse power (HP) has impact on car selling price

relationship

H3:

Pearson correlation of Selling Price in BDT and Fuel (MPG) = -0.281, so it a partial

Fuel Miles per gallon (MPG) has impact on car selling price

negative relationship

H4:

Pearson correlation of Selling Price in BDT and Wheel /Drive = 0.514, so it a negative

Wheel /Drive has impact on car selling price

positive relationship.

Therefore we can say that all hypotheses are true.

The regression equation is:


Selling Price in BDT = -6269746 + 4113 CC + 480 HP - 4486 Fuel (MPG)
+ 883610 Wheel /Drive

The coefficient of determination (R2) and the adjusted value was found to be 49.33% and
42.09% respectively. That means the Selling Price can be explained 49.33% by CC, HP,
Fuel (MPG) and Wheel/Drive.

From the Hypothesis Test for correlation coefficient we can conclude that among 4
independent variables fuel miles (MPG) have inverse relation with the selling price and
the other 3 CC, HP and Wheel drive have positive relationship with the car selling price.

From the Hypothesis Test for partial regression coefficient we can conclude that all
independent variables are not a valuable predictor in the presence of the other variables
while predicting cars selling price. That means the selling price of a car cannot be found
using the relationship with just one independent variable as the other variables plays a
great role as well.

And after testing the usefulness of the regression model we can say that this regression
model is useful in predicting the car selling price.

11. Conclusion:
There are other variables such as the brand image, the type of tires used in the car, the interior
decoration type of car, the type of engine used etc. All these and others factors play a major role
in determining the selling price. Due to time constraints and data constraints we need to work
with the available factors and that is explained by the value of R2 in the report. The report could
have been more realistic if the other variables could be included.

13. References:

Pacific Motors BD Ltd.

Navana 3s centre

Car retailers:

Car selection

KK automobiles

Sal Sabeel cars

http://www.toyota.com
http://www.nissan-global.com/EN/index.html
http://worldwide.hyundai.com/WW/Main/index.html
http://www.simetric.co.uk/si_cc2hp.htm

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