A group of builders are considering a method for estimating the cost of constructing custom houses.
The builders used the method to estimate the cost of 10 €œspec€™€™ houses that were built without a commitment from a customer. The builders obtained the actual costs ­ (exclusive of land costs) of completing each house, to compare with the estimated costs.
€œWe went back to our accountant, who did a regression analysis of the data and gave us these results. The accountant says that the estimates are quite accurate, with an 80% correlation and a very low p-value. We€™re still pretty skeptical of whether this new method gives us decent estimates. We only clear a profit of about 10 percent, so a few bad estimates would hurt us. Can you explain to us what this output says about the estimating method?€™€™
Write a brief, not-too-technical explanation for them. Focus on the builders€™ question about the accuracy of the estimates. A plot is shown here.

HTB Regress Actalni variable Estimate. The regression equation is Actual-347391.25 Etimate Predictor Coer -34739 1 2474 Stdev 60147 0.3293 t-ratio -0.58 3.79 0.579 0.005 stinate s19313 Analysis of variance R-sq 64 , 2 R-sq(aaj) 59.78 # DF KS Regression 1 535081113 5350811136 Eror rotal 14.35 0.005 2983948032 332993504 9 9334759912 Unusual Observations obs . Estimate Actual Fit Staev . Fit Resaua1 .Resid 2 186200152134 97531 6296 -45397 -2.49 R denotes an obs. With a large at. resid Correlation g timate, 'Actual, . correlation of Estimate and Actual # 0.801 24,000 23.000- 22,000- 21.000 20,000 9,000 8,000 17,000 16,000- 500o- 15,00016000 17,000 18000 19,000 2000021.000 22,000 Estimated $