SCENARIO 14-4 The Regression Tree Below Was Obtained for Predicting the Weekend

question 218

Short Answer

SCENARIO 14-4
The regression tree below was obtained for predicting the weekend box office revenue of a newly released movie (in thousands of dollars) based on data collected in different cities on the expenditure (at $25, $30, $35, $40, $45, $50, $55, $60, $65 or $70 thousand) spent on TV advertising and the number of times (10, 15, 20, 25, 30 or 35) a day the advertisement appear on TV.
-Referring to SCENARIO 14-4, how many cities were used in generating the regression tree?

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Definitions:

Discounting

The process of determining the present value of a future amount of money or stream of cash flows given a specific rate of return.

Compounded Annually

Interest on an investment that is calculated once a year on both the initial principal and the accumulated interest from previous periods.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, so that the balance grows at an increasing rate.

Compounded Annually

A method of calculating interest in which the accumulated interest is added to the principal at the end of each year, resulting in interest on interest in successive years.