The appraisal of a warehouse can appear straightforwardcompared to other appraisal

Chapter 12, Problem 68

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The appraisal of a warehouse can appear straightforwardcompared to other appraisal assignments. A warehouseappraisal involves comparing a building that is primarily anopen shell to other such buildings. However, there are still anumber of warehouse attributes that are plausibly related toappraised value. The article Challenges in AppraisingSimple Warehouse Properties (Donald Sonneman, TheAppraisal Journal, April 2001, 174178) gives the accompanyingdata on truss height (ft), which determines howhigh stored goods can be stacked, and sale price ($) persquare foot.a. Is it the case that truss height and sale price are deterministicallyrelatedi.e., that sale price is determinedcompletely and uniquely by truss height? [Hint: Look atthe data.]b. Construct a scatterplot of the data. What does it suggest?c. Determine the equation of the least squares line.d. Give a point prediction of price when truss height is27 ft, and calculate the corresponding residual.e. What percentage of observed variation in sale price canbe attributed to the approximate linear relationshipbetween truss height and price?