MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN: 9781119256830
Author: Amos Gilat
Publisher: John Wiley & Sons Inc
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Because of uncertainty in real estate markets, many homeowners are considering remodeling and constructing additions rather than selling, probably the most expensive room in the house to remodel is the kitchen, with an average cost of about $23,400. In terms of resale value, is remodeling the kitchen worth the cost? The following cost and resale figures are published by remodeling magazine for 11 cities. Assume the differences are normally distributed in the population.   

City

Cost

Resale

Atlanta

$20427

$25163

Boston

$27255

$24625

Des Moines

$22115

$12600

Kansas City

$23256

$24588

Louisville

$21877

$19267

Portland

$24255

$20150

Raleigh

$19852

$22500

Reno

$23624

$16667

Ridgewood

$25885

$26875

San Francisco

$28999

$35333

Tulsa

$20836

$16292

 

Requirements:

  • Use the above data to construct a 99% confidence interval for the difference between cost and added resale value of kitchen remodeling. 
  • At 1% level of significance, is there evidence that the difference between cost and added resale value of kitchen remodeling exist?    
  • Which test statistics is applicable in this case and why?                                                                   

                                                                                                     

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