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p value of T, is less than 0.0001, the null

Figure 3.3.1 displays the scatter diagram of the recovered and added amounts, estimated regression line, and the 95% confidence band for the predicted recovered amount. It can be seen from Fig. 3.3.1 that not only a linear regression model provides an adequate fit but also the 95% confidence band is very tight. Since R2 = 0.995 and the null hypothesis of zero coefficient for a quadratic term in the model was not rejected at the 5% level of significance (T2 = 0.176 with a p value of 0.866), the simple linear regression model is an appropriate statistical model.