A Regression Analysis Relating a Company's Sales,their Advertising Expenditure,price,and Time

question 9

Essay

A regression analysis relating a company's sales,their advertising expenditure,price,and time resulted in the following.

a.At 95% confidence,determine whether or not the regression model is significant.Fully explain how you arrived at your conclusion (give numerical reasoning)and what your answer indicates.
b.At 95% confidence determine which variables are significant and which are not.Explain how you arrived at your conclusion (Give numerical reasoning).
c.Fully explain the meaning of R-square,which is given in this model.Be very specific and give numerical explanation.

Calculate and interpret contribution margin and contribution margin ratio.

Apply the high-low method to estimate variable and fixed costs.

Understand the concept and calculation of the margin of safety.

Evaluate the effects of changes in sales, costs, and prices on a company's break-even point and profitability.

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Definitions:

Equity

The value of an asset after deducting the amount of all liabilities on that asset. In investing, it often refers to the ownership interest held by shareholders in a corporation.

Firm's Debt

The total amount of money a company owes to creditors, including loans, bonds, and other forms of debt.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk of financial loss.

Call Option

An agreement that grants the purchaser the option, not the compulsion, to acquire an asset at a predetermined price during a defined timeframe.