Commercial real estate prices and rental rates suffered substantial declines in 2008 and 2009. These declines were particularly severe in As

Question

Commercial real estate prices and rental rates suffered substantial declines in 2008 and 2009. These declines were particularly severe in Asia; annual lease rates in Tokyo, Hong Kong, and Singapore declined by 40% or more. Even with such large declines, annual lease rates in Asia were still higher than those in many cities in Europe. Annual lease rates for a sample of 30 commercial properties in Hong Kong showed a mean of 1,114 per square meter with a standard deviation of 230. Annual lease rates for a sample of 40 commercial properties in Paris showed a mean lease rate of 989 per square meter with a standard deviation of 195. On the basis of the sample results, can we conclude that the mean annual lease rate is higher in Hong Kong than in Paris? Develop appropriate null and alternative hypotheses. At the 5% level of significance, what is your conclusion?

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Skylar 2 months 2021-10-16T16:43:48+00:00 1 Answer 0 views 0

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    2021-10-16T16:45:25+00:00

    Answer:

    Conclusion

        The average rental rate in Hong Kong are higher than in Paris

    Step-by-step explanation:

    From the question we are told that

      The sample size for Hong Kong is  n_1 = 30

      The mean for Hong Kong is \mu_h = 1,114 \ m^2

       The standard deviation for Hong Kong iss = 230

       The sample size for Paris is  n_2 = 40

          The mean for Paris is \mu_p = 989 \ m^2

        The standard deviation for Paris is s_p = 195

          The level of significance is  \alpha = 0.05

    The Null Hypothesis is  

              H_o : \mu_1 - \mu_2 = 0  

    The alternative hypothesis is

              H_a: \mu_1 - \mu_2 >0

    The test statistics is mathematically represented as

              t = \frac{\mu _1  - \mu_2  - d }{\sqrt{(\frac{s^2}{n1} )+(\frac{(s_p^2}{n_2} )}}

    Substituting values

            t = \frac{1114  - 989  - 0 }{\sqrt{(\frac{230^2}{30} )+(\frac{(195^2}{40} )}}  

           t =  2.399

    Since the value of the test statistics is higher than the  significance level then there  is enough evidence to conclude that the average rental rate in Hong Kong are higher than in Paris

     

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