Multiple Linear Regression
Basing on the data set, the company should set its other operations in Rome because the prevailing conditions in the city would be favorable for advancing the business venture. To begin with, the multiple R-value of 0.935824078 is higher than 0.5, indicating that there is a relationship between the variables. Besides, the adjusted R-Square of 80.12% means that we can draw valuable conclusions from the analysis of the dat
- The following conditions would support the decision to invest in Rome;
Firstly, the Predicted Cost of Living Index in Rome is the lowest in comparison to the other cities, meaning that the cost of livelihood is cheaper. It shows that buying a means of livelihood in Rome will be more affordable.
Furthermore, the analysis also indicates that Rome’s standard residual is 0.777188237 (Fisher, 2018), presenting the lowest value in the market. Thus, the predictions done were almost accurate, and therefore, the market is predictable, and it is possible to model it. It will be beneficial for the business because the standard residual value is a measure of the proximity of the projected outcome from the real ones. Therefore, it follows that the market can be modeled and is conducive for business (Kenton, 2019).
Secondly, it is noted that the standard residual value is more significant than zero(0), indicating that the business will be more profitable than was projected.
Lastly, the value of the residual is 5.105504624, meaning that the company will be valuable in the market.
From the above deductions, it is clear that Rome would be an ideal city for the company to set its new ventures if it is to succeed because the prevailing conditions will be favorable.
References
Fisher, C. (2018). How to Estimate the Residual Value of an Investment in a Business. Retrieved from Chron: https://smallbusiness.chron.com/estimate-residual-value-investment-business-81617.html
Kenton, W. (2019, June 30). Residual Standard Deviation Definition. Retrieved from Investopedia: https://www.investopedia.com/terms/r/residual-standard-deviation.asp