Exercise 13-60 (LO13-2, LO13-3, LO13-5)

Waterbury Insurance Company wants to study the relationshipbetween the amount of fire damage and the distance between theburning house and the nearest fire station. This information willbe used in setting rates for insurance coverage. For a sample of 30claims for the last year, the director of the actuarial departmentdetermined the distance from the fire station (x) and theamount of fire damage, in thousands of dollars (y). TheMegaStat output is reported below.

ANOVA table
Source	SS	df	MS	F
Regression	1,870.5782	1	1,870.5782		41.23
Residual	1,270.4934	28	45.3748
Total	3,141.0716	29

Regression output
Variables	Coefficients	Std.Error	t(df=28)
Intercept	13.4867	3.1191	2.21
Distance–X	5.2717	0.8211	6.42

a. Write out the regression equation

1. How much damage would you estimate for a fire 4 miles from thenearest fire station? (Round your answer to the nearestdollar amount.)

2. Determine and interpret the coefficient of determination.(Round your answer to 3 decimal places.)

   c-2. Fill in the blank below. (Roundyour answer to one decimal place.)

3. Determine the correlation coefficient. (Round youranswer to 3 decimal places.)

4. State the decision rule for 0.01 significance level:H₀ : ρ = 0; H₁ :ρ ≠ 0. (Negative value should be indicated by aminus sign. Round your answers to 3 decimal places.)

5. Compute the value of the test statistic. (Round youranswer to 2 decimal places.)